A Situation Involving Certain Types of Perils Such as Earthquakes

question 50

Multiple Choice

A situation involving certain types of perils such as earthquakes and floods where only those people with high probabilities of loss will want to buy the coverage thereby violating the law of large numbers is called

• A)unaffordable risk.
• B)adverse selection.
• C)the large-loss principle.
• D)the risk of large numbers.

---

Definitions:

Gun

A weapon incorporating a metal tube from which bullets, shells, or other projectiles are propelled by explosive force.

Immunity

Protection against legal action or from disease; in legal contexts, it often refers to exemption from prosecution.

Information

A formal accusation or complaint (without an indictment) issued in certain types of actions (usually criminal actions involving lesser crimes) by a law officer, such as a magistrate.

Prosecution

The legal process of holding someone responsible for a alleged crime, involving the government or state as the prosecuting body.