Which of the Following Statements About Methods for Estimating Loss

question 1

Multiple Choice

Which of the following statements about methods for estimating loss reserves for property and casualty insurers is (are) true?
I.The judgment method involves the use of a statutory formula to estimate the loss reserve.
II.The average value method is used when the number of claims is large and the claims are settled quickly.

• A) I only
• B) II only
• C) both I and II
• D) neither I nor II

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Definitions:

Nominal Market Yield

The stated or face interest rate of a bond or other fixed-income security without adjusting for inflation.

Semi-Annually

Occurring or calculated twice a year, typically every six months.

Comparable Issues

Securities or financial instruments that are similar in terms of yield, maturity, credit quality, and other characteristics, used for benchmarking.

Yielding

In finance, referring to the income return on an investment, such as the interest or dividends received from holding a particular security.