The Basic Purpose of Insurance Is to

question 23

Multiple Choice

The basic purpose of insurance is to

• A) encourage lawsuits.
• B) pool risk.
• C) reduce attorneys' fees.
• D) avoid liability.

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Definitions:

Salvage Value

The projected remaining worth of an asset upon reaching the end of its serviceable life.

Straight-Line Depreciation

A formula for distributing the cost of a tangible asset over its period of usability in consistent annual sums.

Production Line

A sequence of operations that assembles or manufactures products in a factory.

Expansion Option

An option within a project that allows for expansion, scaling up production or operations, if the initial phase is successful, often evaluated in capital budgeting.