There Have Been a Series of Large Judgments in Product

question 9

Multiple Choice

There have been a series of large judgments in product liability cases against companies producing hair dryers. If this trend continues, insurance companies will respond by ________ the premiums charged for liability insurance for hair dryer manufacturers.

• A) lowering
• B) canceling
• C) increasing
• D) underwriting

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Definitions:

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Market Price

The current price at which an asset or service can be bought or sold on the open market.

Retained Earnings

The part of net profits not distributed as dividends, instead kept by the company for reinvesting in its main business operations or for debt repayment.

Large Stock Dividend

A large stock dividend is a distribution of shares to existing shareholders at no additional cost, usually in proportion to their current holdings, often used to conserve cash while still rewarding shareholders.