Which of the Following Statements About Insurance Is NOT Correct

question 20

Multiple Choice

Which of the following statements about insurance is NOT correct?

• A)The insurance premium is calculated on the basis of the risk insured.
• B)Insurance is a means for people and businesses to protect themselves against the risk of loss.
• C)It is possible to insure against both speculative and pure loss.
• D)It is possible to insure against loss caused by natural disasters or legal action.

Know the distinction between basic EPS and diluted EPS.

Understand the impact of corporate actions like bonus shares and share splits on the calculation of EPS.

Identify adjustments necessary for calculating diluted EPS.

Learn about the retrospective adjustments required for changes in accounting policies or correction of errors in respect to EPS.

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Definitions:

Callable Debenture

A type of bond that can be redeemed by the issuer before its maturity date at a predetermined price.

Puttable Mortgage Bond

A type of bond that gives the holder the option to return the bond to the issuer before its maturity date, typically in response to changes in interest rates.

Yield

The income returned on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost.

TIPS Bond

Treasury Inflation-Protected Securities are U.S. government bonds designed to safeguard investments against the detrimental impacts of inflation by being tied to inflation rates.