All of the Following Are Reasons Why Mutual Insurance Companies

question 42

Multiple Choice

All of the following are reasons why mutual insurance companies convert to stock insurance companies EXCEPT

• A)Stock companies can offer stock options to attract and retain key personnel.
• B)Stock companies can raise new capital more easily.
• C)Stock companies are exempt from state insurance regulation.
• D)Stock companies offer greater flexibility to expand through acquisitions.

---

Definitions:

Monetary Liability

An obligation of a company or individual to pay a sum of money in the future, typically involving interest.

Hedge

A financial strategy implemented to reduce the risk of adverse price movements in an asset, typically through derivative contracts.

Premium

The amount paid for a product or service beyond its basic cost, often relating to insurance policies, bonds, or options contracts.

Monetary Assets

Assets that hold a fixed monetary value, including cash, currency, and receivables, and are not significantly affected by inflation or currency fluctuations.