Which of the Following Statements About Subrogation Is True

question 52

Multiple Choice

Which of the following statements about subrogation is true?

• A)Subrogation eliminates adverse selection.
• B)Subrogation helps to hold down the cost of insurance.
• C)Subrogation results in violation of the principle of indemnity.
• D)Subrogation permits a party who caused a loss to avoid responsibility for the loss.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Expected Income Stream

The anticipated series of payments or revenues over a specified period.

Investment Project

A project involving the allocation of capital with the intention of generating future returns.

Expected Rate Of Return

The profit or loss an investor anticipates on an investment, stated as a percentage of the initial investment.