Multiple Choice
Which of the following is a false statement?
A) Risk averse people will pay an insurance premium that is greater than the mathematically fair chance of loss in order to relieve themselves of uncertainty.
B) A risk seeker is willing to assume risk.
C) The mathematically fair price for insurance is the objective risk for the insurer multiplied by the maximum possible loss.
D) Insurance is never a mathematically fair trade because the insurer adds several operating and other costs to loss costs when it calculates the premium.
Correct Answer:
Verified
Correct Answer:
Verified
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