Which of the Following Is an Example of Screening

question 83

Multiple Choice

Which of the following is an example of screening?

• A)A lender checks a loan applicants credit history.
• B)When an employee purchases group life insurance without taking a physical exam, she knows more about her health than does the insurance company.
• C)When someone is considering buying a used car from a dealership, the seller knows the repair history of the car but the potential buyer does not.
• D)All of the above are correct.

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Definitions:

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are worth more than their cost to achieve strategic goals.

Cash Flows

The total amount of money being transferred into and out of a business, which affects the company's liquidity.

Initial Cost

The upfront expenditure related to acquiring or starting a new project or investment, not including ongoing or future costs.

Risk Level

A measure of the uncertainty associated with achieving return objectives within investing, often determined by the volatility in asset prices and market fluctuations.