People Who Are Risk Neutral

question 84

Multiple Choice

People who are risk neutral

• A) prefer a sure thing over a gamble with a higher expected value.
• B) choose the outcome with the highest expected value.
• C) choose the outcome with the lowest expected value.
• D) prefer gambles with lower expected values but potentially higher winnings over a sure thing.
• E) do not partake in any risky activities.

---

Definitions:

Medical Expenses

Medical expenses refer to the costs incurred for healthcare services, including doctor visits, hospital stays, medications, and procedures, which can be covered by insurance or out-of-pocket payments.

Low-risk Driver

A motorist considered less likely to file an insurance claim based on factors like driving history, thereby often enjoying lower insurance premiums.

Insurance Premiums

Regular payments made to an insurance company in exchange for coverage.

No-fault Insurance

An insurance policy where each party's insurance company pays for their own losses, regardless of who was at fault in the incident.