The law of large numbers allows insurance companies to
A) hold capital market instruments as assets without fearing overly large numbers of defaults.
B) hold money market instruments as assets without fearing overly large numbers of defaults.
C) predict the average number of occurrences of insurable events in a large population of policyholders.
D) charge higher premiums than necessary, knowing that large numbers of individuals will pay them.
C
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In the United States during the Vietnam War era, as military spending increased
A) unemployment dropped to very low levels. B) frictional unemployment dropped, but cyclical unemployment increased. C) both frictional and cyclical unemployment increased. D) overall unemployment rates did not change.
One of the best defenses we have against malaria these days comes from a fern-like weed called wormwood. Fluctuating supply and demand have pushed the plant's price from $155 per kilo one year, to over $1000 the next
There is a push to set a price ceiling for the plant. Which of the following would NOT occur if there was a price ceiling set below the equilibrium price on wormwood? A) The wormwood market would be allocatively efficient because its price would not fluctuate. B) A wormwood shortage might occur. C) A black market for wormwood may be created. D) There would be an increase in inefficiency in the wormwood market.