Risk Retention Would Be Most Appropriate in Which of the Following

question 203

Multiple Choice

Risk retention would be most appropriate in which of the following cases?

• A)Collision coverage on a $14,000 car
• B)Coverage for loss of a contact lens
• C)Medical expenses for a healthy young adult
• D)Liability coverage for a middle-income individual

---

Definitions:

Effective Annual Rate

The interest rate that describes the full amount of interest paid over one year, considering compounding.

APR

Annual Percentage Rate; the annual rate charged for borrowing or earned through an investment, inclusive of any fees or additional costs.

Effective Rate

The actual interest rate on a loan or investment, taking into account the effect of compounding over a given period of time.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows, reflecting the risk and time value of money.