If You Have Private Information That You Are a Riskier

question 63

Multiple Choice

If you have private information that you are a riskier driver than your record indicates,you are likely to buy an insurance policy that has a ________ deductible and a ________ premium.

• A) high; high
• B) high; low
• C) low; high
• D) low; low
• E) None of the above answers are correct because private information has no effect in the market for auto insurance.

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Definitions:

Face Value

The nominal value stated on a financial instrument, such as a bond or stock, representing its official worth.

Accrued Interest

Interest that has been incurred but not yet paid or received, often related to bonds or loans.

Bond Interest Expense

The cost incurred by an entity for borrowing funds through the issuance of bonds, represented as interest payments to bondholders.

Income Statement

An income statement is a financial statement that shows a company's revenues and expenses over a specific period of time, illustrating how the revenues are transformed into net income or loss.