Insurance companies:
A) profit from the difference between the premiums paid and the expected value of clients' payouts.
B) only profit by selling to risk neutral clients.
C) must charge less than the expected value of payout, otherwise they would go out of business.
D) All of these statements are true.
Correct Answer:
Verified
Q86: Risk pooling:
A) assures the individuals that they
Q89: Insurance premiums represent:
A) the expected value of
Q90: A mechanism for reallocating risk is:
A) risk
Q91: Risk pooling:
A)reallocates the likelihood of catastrophes happening.
B)reallocates
Q93: Insurance works because it:
A) reallocates the costs
Q95: Risk pooling:
A) reduces the chances of catastrophes
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Q97: In general, the amount people pay for
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