Question

In: Finance

1-The statement that insurance should be purchased only when losses are large and uncertain expresses: Select...

1-The statement that insurance should be purchased only when losses are large and uncertain expresses:

Select one:

a. The central limit theorem

b. The rule of adverse selection

c. The law of large numbers

d. The large-loss principle

2-To estimate the value of potential property losses, risk managers should focus on:

Select one:

a. The purchase price of the property

b. The property's book value

c. The property's replacement cost

d. The property's fair market value

3-Typical sources of liability losses include all the following except:

Select one:

a. A worker allows a machine to be destroyed by improper maintenance

b. Losses caused to workers injured on the job

c. Losses caused to the real property of others

d. Losses caused by bodily injury to customers in a store

4-Property insurers providing more than one type of coverage are called:

Select one:

a. Joint capacity insurers

b. Double indemnity carriers

c. Multiple-line insurers

d. Joint underwriting organizations

Solutions

Expert Solution

1-The statement that insurance should be purchased only when losses are large and uncertain expresses:

The correct answer is the last option i.e. option d. The large-loss principle

Under this principle, the need for insurance is justified only when losses are large and uncertain

2-To estimate the value of potential property losses, risk managers should focus on:

The correct answer is the last option i.e option d. The property's fair market value

3-Typical sources of liability losses include all the following except:

The correct answer is the first option a. A worker allows a machine to be destroyed by improper maintenance

All other options are the liability losses.

4-Property insurers providing more than one type of coverage are called:

The correct answer is the option c. Multiple-line insurers


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