Which of the Following Increases the Predictability of Medical Risk

question 6

Multiple Choice

Which of the following increases the predictability of medical risk distributions for insurance risk pools?

• A) the individuals in the group having the average medical risk of their age and sex group
• B) the presence of adverse selection
• C) smaller,more manageable groups rather than large groups
• D) more diverse groups in each risk pool

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Definitions:

Weighted Average Cost

A calculation that takes into account the varying costs of different sources of capital, weighted by their proportions in the capital structure.

Cost of Equity

The return that investors expect for investing in a company's equity, representing the compensation the market demands in exchange for owning the asset and bearing the risk of ownership.

After-tax Cost

The expense of an investment or operation after accounting for the impact of taxes, reflecting the true cost to the investor or business.