People with a Bad Driving Record Find It Difficult to Buy

question 124

Multiple Choice

People with a bad driving record find it difficult to buy automobile insurance because insurance companies fear that ___________ may happen if they raise the premiums.

• A) adverse selection
• B) moral hazard
• C) risk aversion
• D) none of the statements associated with this question are correct

---

Definitions:

Expense Accounts

Financial accounts used to track money spent or costs incurred in a company's operations.

Credits

Entries in accounting that increase liabilities, revenue, or equity accounts, or decrease asset or expense accounts.

Withdrawals

Money or assets taken out of a business by its owner(s) for personal use.

Owner's Equity

The ownership stake of shareholders or owners in a company's assets once all debts have been subtracted.