Cindy Was Contacted by Her Home Insurance Agent to Discuss

question 102

Multiple Choice

Cindy was contacted by her home insurance agent to discuss ways to decrease her premium. Which of the following should NOT reduce her premium?

• A) Installing an alarm system.
• B) Increasing the amount of coverage.
• C) Installing smoke detectors or a fire extinguisher.
• D) Increasing her deductible.
• E) Installing dead-bolt locks.

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Definitions:

Capital Market Line

A line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio.

Forecasted Return

The predicted financial return of an investment over a specific period, often based on historical data, current trends, and professional analysis.

Required Return

The minimum return that an investor expects to achieve on an investment to consider it a worthwhile risk.

Standard Deviation

A measure of the dispersion or variability in a set of values, often used to gauge the risk associated with a particular investment or portfolio.