Insurance Brokerage Company Uses a Computer-Based Method of Estimating the Losses

question 23

Multiple Choice

Insurance Brokerage Company uses a computer-based method of estimating the losses its clients will suffer if a severe storm or earthquake occurs.This method of estimating losses is called

• A)capital budgeting.
• B)securitization of risk.
• C)risk mapping.
• D)catastrophe modeling.

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Definitions:

Nominal Interest Rate

The interest rate before adjustments for inflation, as opposed to the real interest rate which is adjusted for inflation.

Equilibrium Interest Rate

The equilibrium interest rate is the rate at which the demand for funds equals the supply of funds in the financial markets, balancing savings and borrowing.

Total Output

The complete quantity of goods or services produced by an entity within a specific period.