Suppose Lisa and Eric Do Not Purchase an Adequate Amount

question 30

Multiple Choice

Suppose Lisa and Eric do not purchase an adequate amount of insurance on their home.In the event of a claim,they would pay a portion of it.This is the

• A)inflation guard.
• B)added liability.
• C)replacement cost.
• D)coinsurance provision.
• E)70 percent rule.

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Definitions:

Long-Term U.S. Treasury Bonds

Government bonds issued by the United States Department of the Treasury with maturities typically longer than 10 years, providing stable income with low risk.

Risk Premium

The additional return over the risk-free rate that investors require as compensation for investing in risky assets.

Coefficient of Variation

A statistical measure of the dispersion of data points in a data series around the mean, expressed as a percentage of the mean, often used to assess the risk of an investment relative to its expected return.

Historical Excess Returns

The returns on an investment or portfolio in excess of a benchmark or risk-free rate, assessed over a specific historical period.