Which Is Not a Management Practice for Reducing the Problems

question 57

Multiple Choice

Which is not a management practice for reducing the problems of adverse selection and moral hazard in insurance?

• A)deductibles
• B)restrictive provisions
• C)coinsurance
• D)reinsurance

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Definitions:

Responsible Person Doctrine

A legal principle that holds an individual personally liable for unpaid taxes or obligations of a business, based on the level of control or authority they have over the financial operations of the entity.

Insider Information

Insider information consists of non-public, material information about a company or its securities that could influence an investor's decision to buy, sell, or hold the stock.

Par-Value Stock

Shares of a company that have a minimum fixed face value; the value is set at the time the shares are issued.

Stock Certificate

A physical document that represents ownership of a certain number of shares in a corporation.