Which of the Following Insurance Contracts Is Enforceable

question 17

Multiple Choice

Which of the following insurance contracts is enforceable?

• A) An insurance policy taken out on a minor by an adult
• B) A life insurance contract in which the insured misrepresents his or her health or age
• C) An insurance contract where only one party to a contract has the capacity to contract
• D) A contract whose warranty is breached by the insured

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Definitions:

NPV

Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment, representing the difference between the present value of cash inflows and outflows.

IRR

A metric used in financial analysis to estimate the profitability of potential investments, it represents the annualized effective compounded return rate.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and should not influence future business decisions.

Initial Period Cash

The amount of cash available at the beginning of a financial period or the start of a project.