A Person Who Practices Poisonous Snake Charming and Does Not

question 116

Multiple Choice

A person who practices poisonous snake charming and does not reveal this to her health insurance company before purchasing insurance is an example of

• A) moral hazard.
• B) adverse selection.
• C) signaling.
• D) screening.

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Definitions:

Fiscal Year

A financial year used by governments and businesses for accounting purposes, which may or may not align with the calendar year.

Convertible Bonds

Debt securities issued by a corporation that can be converted into a predetermined number of the company's equity shares.

Old Age Security Clawback

A repayment obligation that kicks in when the annual income of an Old Age Security (OAS) recipient exceeds a certain threshold, reducing the OAS benefit.

Net Income

The sum of income remaining after subtracting all costs and taxes from the total revenue.