If You Have Private Information That You Are a Riskier

question 18

Multiple Choice

If you have private information that you are a riskier driver than your record indicates,you are likely to buy an insurance policy that has a ________ deductible and a ________ premium.

• A) high; high
• B) high; low
• C) low; high
• D) low; low
• E) None of the above answers is correct because private information has no effect in the market for auto insurance.

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Definitions:

Skewness

A measure of the asymmetry of the probability distribution of a real-valued random variable about its mean.

Simple Random Sample

A selection from a larger population where every member has an identical chance of being picked.

T Procedures

Statistical methods based on the t-distribution, used for hypothesis testing and confidence interval estimation, mainly when sample sizes are small.

Sample Size

The number of observations or data points collected in a sample from a larger population, used in statistical analysis.