Question 1

Insurance premiums often represent:

Accepted Answer

A) the expected value of the payout the company will give to individuals who are insured. 
B) more than the expected value of the payout the company will give to individuals who are insured. 
C) less than the expected value of the payout the company will give to individuals who are insured. 
D) peace of mind and are unrelated to the expected value of the payout the company will give to individuals who are insured. 
A) the expected value of the payout the company will give to individuals who are insured. 
B) more than the expected value of the payout the company will give to individuals who are insured. 
C) less than the expected value of the payout the company will give to individuals who are insured. 
D) peace of mind and are unrelated to the expected value of the payout the company will give to individuals who are insured.

Question 2

The future value of a deposit is _______, where r = interest rate, n = periods, and PV = present value.

Accepted Answer

A) PV × (1 + r)× n 
B) PV × (1 + r)n 
C) PV × (r)n 
D) PV / (1 + r)n 
A) PV × (1 + r)× n 
B) PV × (1 + r)n 
C) PV × (r)n 
D) PV / (1 + r)n

Question 3

Making investments that have unrelated risks:

Accepted Answer

A) is the key to diversification. 
B) is irrational. 
C) increases the likelihood that a catastrophe will occur. 
D) None of these are true. 
A) is the key to diversification. 
B) is irrational. 
C) increases the likelihood that a catastrophe will occur. 
D) None of these are true.

Question 4

Risk pooling occurs when:

Accepted Answer

A) people organize themselves into a group to collectively absorb the cost of the risk faced by each individual. 
B) people organize themselves into groups according to how risk-averse they are. 
C) people organize themselves into groups according to recognizable characteristics. 
D) companies organize individuals into groups according to how risk-averse they are. 
A) people organize themselves into a group to collectively absorb the cost of the risk faced by each individual. 
B) people organize themselves into groups according to how risk-averse they are. 
C) people organize themselves into groups according to recognizable characteristics. 
D) companies organize individuals into groups according to how risk-averse they are.

Question 5

What is the amount of interest owed on a loan of $100,000 after a year at an interest rate of 3 percent?

Accepted Answer

A) $3,000 
B) $30,000 
C) $103,000 
D) $100,300 
A) $3,000 
B) $30,000 
C) $103,000 
D) $100,300

Insurance premiums often represent:

The future value of a deposit is _______, where r = interest rate, n = periods, and PV = present value.

Making investments that have unrelated risks:

Risk pooling occurs when:

What is the amount of interest owed on a loan of $100,000 after a year at an interest rate of 3 percent?

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Game Theory and Strategic Thinking

Information

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters

Exam 11: Time and Uncertainty

Insurance premiums often represent:

The future value of a deposit is _______, where r = interest rate, n = periods, and PV = present value.

Making investments that have unrelated risks:

Risk pooling occurs when:

What is the amount of interest owed on a loan of $100,000 after a year at an interest rate of 3 percent?

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Game Theory and Strategic Thinking

Information

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters