Which of the Following Is a Key Consequence of the Classification

question 17

Multiple Choice

Which of the following is a key consequence of the classification of an insurance contract as an instrument of utmost good faith?

• A) retaining an insurable interest
• B) a right to indemnification
• C) a duty to bear a deductible cost
• D) an insured's duty to disclose

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Definitions:

Cash Ratio

A liquidity ratio that measures a company's ability to pay off its short-term liabilities with its cash and cash equivalents.

Average Collection Period

The average number of days it takes for a business to receive payment from its customers for invoices issued.

Total Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue; calculated by dividing sales by total assets.

Fixed-Asset Turnover

A financial ratio that measures a company's efficiency in using its fixed assets to generate sales, indicating how well assets are being managed.