Multiple Choice
In terms of insurance,which of the following statements is explained by adverse selection?
A) A person with riskier characteristics tends to be more likely to buy insurance.
B) A person who is more risk-averse tends to be more likely to buy insurance.
C) Insurance companies charge risk-averse customers a higher premium, since they need more peace of mind.
D) None of these statements is true.
Correct Answer:
Verified
Correct Answer:
Verified
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