Which of the Following Is Correct with Respect to the Meaning

question 67

Multiple Choice

Which of the following is correct with respect to the meaning of an insurable interest?

• A) An insurable interest means that the person causing the loss is required to show enough interest in what he is doing to be careful.
• B) The insurance company must have received a premium before it can be said to have an interest in the agreement and be bound to pay when a claim is made.
• C) The beneficiary or person receiving payment must have an ownership interest in the thing being insured.
• D) The person taking out the insurance contract must be in a position that he will suffer a loss equal to the amount claimed if the insured-against event occurs.
• E) This term describes when a person has taken out insurance on something.

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Definitions:

Income Taxes

Taxes levied on both earned income (wages, salaries) and unearned income (dividends, interest), imposed by government authorities.

Sunk Cost

A cost that has already been incurred and cannot be recovered, and should not affect future investment or spending decisions.

Capital Budgeting

The process used by businesses to evaluate and prioritize investments in long-term assets and projects based on their potential returns.

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.