Which of the Following Describes a Typical Reinsurance Contract

question 19

Multiple Choice

Which of the following describes a typical reinsurance contract?

• A) Covers a percentage of all losses by an insurance company
• B) Covers all losses of the insurance company up to a certain amount
• C) Covers all losses of the insurance company above a certain amount
• D) Covers all losses of the insurance company between two amounts

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Definitions:

Cost of Equity

The return that a company must earn on the equity-financed portion of its investments to compensate its shareholders for assuming the risk of the investment.

Dividend Growth Rate

The dividend growth rate is a financial metric that measures the annualized percentage rate of growth of a company's dividend payments to its shareholders.

Market Price

The current market quote for the sale or purchase of an asset or service.