Which of the Following Statements About the Insurer Death Spiral

question 46

Multiple Choice

Which of the following statements about the insurer death spiral is not correct?

• A) The insurance pool is shrinking to those who really need insurance.
• B) The remaining policyholders are not susceptible to the peril being insured.
• C) The insurance pool is shrinking to those who are facing high risk.
• D) The insurance premium that needs to be paid is very high.

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Definitions:

Optimal Choice

The best possible selection among various alternatives based on certain criteria or constraints.

Project Alternatives

Project alternatives are different ways to achieve the objectives of a project, considered during the planning phase to select the most efficient method.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity which constitutes the firm's financing of its operations and growth.

Payback Period

An alternative metric to calculate the duration required for an investment to recoup its initial costs, measuring the risk and efficiency of the investment.