3-65 Which of the Following Did NOT Occur in the Life

question 82

Multiple Choice

3-65 Which of the following did NOT occur in the life insurance industry during the most recent financial crisis?

• A)Low equity values reduced asset-based fees on separate account assets.
• B)Losses were incurred on holding of commercial mortgage-backed securities and commercial loans.
• C)Asset-based fees declined on products such as variable annuities and pension fund assets that were tied to equity returns.
• D)Low interest rates and harsh economic conditions caused many policyholders to terminate or surrender their policies.
• E)Policy premium increased as more households and small businesses attempted to transfer risk to insurance companies.

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Definitions:

Perfect Competitor

A market structure in which numerous small firms compete against each other with identical products, no single firm can influence the market price; all firms are price takers.

Marginal Revenue

Extra income gained by disposing of one additional unit of a good or service.

Marginal Cost

The expense associated with manufacturing an extra single unit of a product or service.

Quantity Sold

This refers to the total amount of a product or service that is sold within a given time period.