Which of the Following Statements Are True in the Context

question 52

Multiple Choice

Which of the following statements are true in the context of general insurance?

• A)Loss rates on all general property policies are adversely affected by unexpected increases in inflation.
• B)Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later.
• C)Long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines.
• D)Loss rates on all general property policies are adversely affected by unexpected increases in inflation; long-tail losses arise where the peril occurs during a coverage period but a claim is not made until many years later and loss rates are more predictable on low-severity high-frequency lines than on high-severity low-frequency lines.

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Definitions:

Capital Gains Yield

The percentage change in the price of an investment over a specified period, not accounting for dividends or other earnings.

Yield to Call

The return an investor would receive if a callable bond is held until the issuer exercises the call option.

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer.

Coupon Rate

The interest rate stipulated on a bond or fixed-income security that the issuer pays to the holders periodically until maturity.