Which of the Following Statements Referring to the Loss Ratio

question 24

Multiple Choice

Which of the following statements referring to the loss ratio are true?

• A)The loss ratio measures the actual losses incurred on a line of insurance business.
• B)A common measure of the overall underwriting profitability of a line of insurance business is the loss ratio.
• C)The loss ratio measures the pure losses incurred on a line of insurance business relative to premiums earned.
• D)The loss ratio measures the predicted losses incurred on a line of insurance business relative to premiums earned.

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Definitions:

Inventory Investment

The stock of goods or merchandise kept by a business with the intent to sell it for profit.

Depreciation

A measure of the decrease in value of an asset over time, often due to wear and tear or obsolescence.

Inventory Investment

Refers to the change in the level of stocked goods in a period, contributing to the calculation of Gross Domestic Product (GDP).

Net Investment

The total spending on new capital assets minus the depreciation on existing capital.