On Both Old and New Business, Companies Can Also Avoid

question 103

Multiple Choice

On both old and new business, companies can also avoid premium notes by entering into agreements involving deposits of a portion of the premium with an extension on the balance. These deposits are treated as:

• A) A liability
• B) Unearned revenue and not credited to income until the deposit is used to pay the premium
• C) A liability and not credited to income until the deposit is used to pay the premium
• D) Asset and not credited to income until the deposit is used to pay the premium

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Definitions:

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies if other players keep their strategies unchanged.

Maximin Strategy

A strategic choice aiming to ensure the best of the worst-case outcomes in a competitive or uncertain environment.

Pure Strategies

In game theory, strategies that involve making a specific choice or action with certainty, as opposed to mixed strategies where actions are chosen probabilistically.

Mixed Strategy

A strategic decision in game theory where a player chooses among all possible actions based on a set of probabilities for each action, rather than selecting a single action consistently.