If an Insurance Company Must Charge All Customers a Uniform

question 23

Multiple Choice

If an insurance company must charge all customers a uniform rate that reflects the average cost of insuring any individual in the population, this average cost will be too _______ to attract _______ risks but too _______ to fully cover the losses produced by the _______ risks.

• A) high, bad, low, good
• B) high, good, low, bad
• C) low, good, high, bad

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Definitions:

Real Asset(s)

Physical or tangible assets that have intrinsic value due to their substance and properties, such as real estate, commodities, and natural resources.

Primary Market

The financial market for new securities issues, where corporations sell new stocks and bonds directly to investors.

New Issues

Securities that are offered to the public for the first time through an initial public offering (IPO) or a secondary offering.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, usually measured by GDP.