All of the Following Are Costs to Society Arising from an Insurance

question 56

Multiple Choice

All of the following are costs to society arising from an insurance system's operation except:

• A) payments for losses caused by fraudulent claims
• B) payments for losses caused by exaggerated claims
• C) use of land, labor and capital to operate the insurance companies
• D) payments for losses caused by windstorms such as tornadoes

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other security, typically set at the time it is issued.

Fair Value

An estimate of the market value of an asset or liability, reflecting what a willing buyer would pay a willing seller in an arm's length transaction.

Stock Issuance Costs

Expenses associated with the issuing of new shares of stock, including legal, accounting, and underwriting fees.

Additional Paid-in Capital

The amount investors pay in excess of the par value for shares, reflecting the additional investment made by shareholders over the minimum required.