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Insurance Companies Can Usually Cover The Claims Of Policyholders Because

Dwayne Morise

Question:

Answer: C. by purchasing bonds in the secondary market.

Question: 2. “Reinvestment” means:

  1. new investment in new operations.

  2. B. additional investment in existing operations.

  3. C. new investment by new shareholders.

  4. D. additional investment by existing shareholders.

  5. Answer: D. additional investment by existing shareholders.

  6. Question:

  7. Answer: B. reinvested by the firm in projects offering rates of return higher than the cost of capital.

  8. Question: 4. A financial intermediary provides financing for:

  9. A. individuals.

  10. B. companies.

  11. C. other organizations.

  12. D. all of these.

  13. Answer: D. all of these.

  14. Question: 5. Which of the following statements is not characteristic of mutual funds?

  15. A. They are financial institutions.

  16. B. They raise money by selling shares to investors.

  17. C. They pool the savings of many investors.

  18. D. They offer professional management.

  19. Answer: A. They are financial institutions.

  20. Question:

  21. Answer: A. Mutual funds are efficiently diversified and professionally managed.

  22. Question: 7. Banks cover the costs of the service they provide primarily via:

  23. A. a management fee.

  24. B. a service charge.

  25. C. an interest rate differential.

  26. D. an operating fee.

  27. Answer: C. an interest rate differential.

  28. Question: 8. Which of the following financial intermediaries has shown a preference for investing in long-term financial assets?

  29. A. Commercial banks

  30. B. Insurance companies

  31. C. Finance companies

  32. D. Savings banks

  33. Answer: B. Insurance companies

  34. Question: 9. Which of the following financial intermediaries can loan money directly to businesses?

  35. A. Mutual funds

  36. B. Pension funds

  37. C. Insurance companies

  38. D. All of these

  39. Answer: C. Insurance companies

  40. Question: 10. Insurance companies can usually cover the claims of policyholders because:

  41. A. the incidence of claims normally averages out.

  42. B. they issue thousands of insurance policies.

  43. C. the cost of paying for claims has already been factored into the price of the policies.

  44. D. all of these.

  45. Answer: D. all of these.