A Policy in Which the Insurer Cannot Increase Premium Rates

question 38

Multiple Choice

A policy in which the insurer cannot increase premium rates and must renew the policy until the insured reaches the age specified in the contract is a

• A) cancelable policy.
• B) conditionally renewable policy.
• C) guaranteed renewable policy.
• D) noncancelable policy.

Detail the process and purpose of financial engineering in managing risk.

Recognize how businesses use financial instruments to hedge against price fluctuations in commodities.

Understand the principles of interest rate swaps and their benefits to parties.

Distinguish between hedging transactions exposure and economic exposure.

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Definitions:

Average Total Cost Curve

A graphical representation showing how the average cost of production changes as the quantity of output is altered.

Total Cost

The total amount of money spent on creating goods or services, encompassing both constant and fluctuating expenses.

Producing

Producing involves the creation, manufacturing, or assembly of goods and services for sale or distribution.

Pairs

Two things considered together because of similarity, opposition, or adjacency; often used in context to describe complementary items or concepts.