The Expected Value of a Loss Exposure:
A) can be used by an insurance company to calculate the insurance premium
B) can be used by a firm to save enough to cover the expected losses
C) is an estimate, and not absolute value, of future losses
D) All of the above are correct.

Question

Quizplus · Accepted Answer

All of the choices are correct. The expected value of a loss exposure is an estimate of future losses and can be used by insurance companies to calculate premiums and by firms to save enough to cover the expected losses.