Insurance companies:
A. only profit by selling to risk neutral clients.
B. profit from the difference between the premiums paid and the expected value of clients' payouts.
C. must charge less than the expected value of payout, otherwise they would go out of business.
D. All of these statements are true.
Answer: B
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The average level of effective protection has exceeded 300% for which of the following countries?
(a) Pakistan and Uruguay. (b) Argentina and Brazil. (c) Philippines and Mexico. (d) India and China.
One consequence of raising tax rates is that it
a. provides an added incentive to work b. provides less incentive to participate in the underground economy c. always increases total tax revenues d. leads to less underreporting of income e. leads to more underreporting of income