An Insurance Company Wants to Know Whether the Subscribers to Its

question 49

Multiple Choice

An insurance company wants to know whether the subscribers to its HMO,PPO,or traditional single indemnity plan exhibit better health characteristics.They have the following data for each of their subscribers: % of body weight over optimum weight; blood pressure; cholesterol and hours per week of exercise.The analysis will group subscribers as either healthy,somewhat healthy or not healthy.Which of the following would be the best procedure for making such a determination?

• A)factor analysis
• B)multiple discriminant analysis
• C)multiple regression analysis
• D)cluster analysis

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Definitions:

Utility Score

A numerical assessment that quantifies the satisfaction or utility an individual receives from making certain choices or consuming various goods and services.

Rate of Return

The increase or decrease in value of an investment over a set period, depicted as a percentage of the investment's starting cost.

Variance

A statistical measure that represents the dispersion of a set of data points or investment returns around their mean, indicating their spread or risk.

Indifference Curve

An indifference curve represents a graphical depiction of different bundles of goods between which a consumer is indifferent, reflecting their preferences for those goods' combinations.