Which is not a management practice for reducing the problems of adverse selection and moral hazard in insurance? O deductibles. O restrictive provisions. reinsurance. O limiting conditions. none of these answers.
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Q: The claims issued by the DSU are called premiums. It is true or false?
A: Answer: false
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A: Reinsurance is nothing but an insurance policy taken by an insurance company from another insurance…
Q: Which of the following statements about contingent liabilities is incorrect? Group of answer choices…
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A: Introduction : Contingent liability: Contingent liability means it depends on happening or non…
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A: An insurance contract is a contract between the two parties where one party promises to pay the…
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Q: he following statements is true? a. No loss contingencies should be disclosed if there is just a…
A:
Q: If the chance that a risk will occur cannot be reasonably predicted or the possible financial loss…
A: An uninsurable risk is one that presents an unknown or unacceptable risk of loss for an insurance…
Q: why a company would prefer to hedge over taking an insurance to minimize on risk
A: Company faces many kinds of risks during the operating of the company so company has to manage all…
Q: Which is not an essential characteristic of an insurance contract? A. transfer of significant risk…
A: Answer is A. transfer of significant risk from the issuer to the policyholder Explanation is given…
Q: Which of the following is not an insurance management tool? Group of answer choices deductibles.…
A: Insurance management: Insurance Management is the administration of all insurance requirements, both…
Q: Which of the following is a type of captive formed to write most types of liability insurance…
A: A captive insurance firm is a special arrangement for insurance, which is a subsidiary insurer to…
Q: IDENTIFICATION: What area of insurance companies is faced with the risk that estimates of loss…
A: Insurance risk management is referred as an assessment as well as quantification of the financial…
Q: In order to have an insurable risk, all of the following must be present except? a. The loss must be…
A: Introduction: Risk can be characterised in terms of the uncertainty of future consequences resulting…
Q: Deductibles are not used in which of the following type of insurance?
A: Deductibles in insurance: The deductibles is an expense the insured have to pay in before the time…
Q: Which of the following is the main objective of P2P insurance O a. Less Fraudulent Claims O…
A: The acronym P2P insurance stands for peer to peer insurance. It is formed by a group of people who…
Q: Can both moral hazard and adverse selection occur in the insurance market s the difference between…
A: The insurance industry is an important part of the overall financial industry. Insurance is bought…
Q: How do the passive losses rules and the at risk rules work in conjunction to limit losses?
A: Passive losses: These are the losses that take place when expenses exceed the income in the passive…
Q: An implied condition of pooling risks with insurance is that the event being insured against is…
A: Insurance: An arrangement between the two parties( Insurer & Insured) where the insurer company…
Q: what is one example of a risk management strategy used by insurance companies to mitigate…
A: An underwriter's potential loss is known as underwriting risk. Underwriting risk in insurance can…
Q: Which principles ensures that an insured does not profit by insuring with multiple insurers?
A: The Principles of Contribution ensures that an insurance that an insured does not profit by insuring…
Q: Which of the following is NOT a valid type of compensation for breach of contract? Select one: a.…
A: A contract is an agreement between two or more parties in which one party is bound to perform or not…
Q: Which of the following is a characteristic of a current liability? A. It is an avoidable…
A: Liabilities are classified into two types. 1. Current liabilities ; which are expected to be paid…
Q: a. What is the actuarially fair cost of full insurance against the loss if the company does not make…
A: The question belongs to decision making where there are two options for mitigate future loss. The…
Q: Which of the following is NOT an example of non-deposit taking financial institution (NDFI)? i)…
A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…
Q: How can moral hazard lead to more costly insurance premiums than one was expected?
A: Definition : Moral hazard : The risk of a person not entering into an agreement in good conscience…
Q: Which of the following is not a ground for the extinguishment of an obligation? O Condonation or…
A: Following is the correct answer
Q: The _______________ problem is when customers who are most likely to have a claim against an…
A: In a business, an adverse selection occurs where the knowledge distribution between the buyer and…
Q: Required: a. if arturito will accept the special order, what is the incrementak benefit(loss)?
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Q: 1. Insurable interest refers to O A. the item to be insured should be legal and not against public…
A: Insurable Interest forms subject matter of all insurance policies and is defined as follows
Q: One of the purposes that deductible are used in insurance policies is to O eliminate coverage for…
A: In insurance, deductibles are expenses that a person has to bear by him/herself before the benefits…
Q: Which of the following is correct about the effect of a deductible with respect to the price of an…
A: Insurance is an agreement or a contract between two parties. An insurance contract states that one…
Q: Suppose the analysis of a loss contingency indicates that an obligation is not probable. What…
A: Contingent Liability Contingent liability is one form of liability that arises based on a…
Q: Which of Ike following statements is CORRECT about he Missialement of Age provision in a health…
A: The misstatement of age clause is the provision under the life insurance policy that clears the…
Q: How does title insurance work? Why is it not absolute (fool-proof
A: Title insurance is that insurance product that is related to the world of real estate. It is an…
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- Explain how capital adequacy requirements may affect a commercial bank’s dividend payout and growth potential. If the bank anticipates a decrease in its capital adequacy ratio (capital to total asset ratio), what options are available to prevent the decline? What risks, if any, are there in each strategy... Banks’ managers do not want to mmaintain much capital because they do not bear fully the costs of their failure. In addition to this reason others claim that banks’ managers do not want to maintain higher levels of capital because higher levels of capital attract greater scrutiny from bank regulators. Comment on this claim. The two most pressing demands for liquidity from a bank come from, first, customers withdrawing their deposits. Identify and discuss the second demand on the bank for liquidity.2. If a bank wants to avoid volatility in its regulatory capital, which investment classification would be the most desirable, and which investment classification would be the least desirable? Does your answer differ depending on whether the bank is large or small? In other words, do large and small banks differ on how they can categorize unrealized gains/losses on AFS debt?With no government regulation, how much bank capitals would banks hold? A. Too much capital, reducing the profitability of banks. B. Too much capital, making it more difficult to obtain loans. C. Too little capital, reducing the profitability of banks. D. Too little capital, making it more likely to fail.
- Minimum capital requirement is a popular tool for bank regulation around the world. Some commented argue for differential capital requirements with the size and the systemic importance of financial institutions as the key discriminating factor. What are the basic arguments for increasing capital requirements at large commercial banks? In what ways will depositors, stockholders, and society in general benefit? How might each group be disadvantaged? As commercial banks enter new lines of business such as brokerage, how much additional capital should be required? Should these new lines of business be insured under a depository insurance scheme? Why or why not? Give examples from today's financial marketplace.Which of the following statements regarding the banks motives for holding reserves is incorrect ? A ) If banks on average expect an increase in policy rates they will be inclined to decrease their reserve holdings. B ) As the opportunity cost of holding reserves increase ,ceteris paribus banks are expected to decreasetheir holdings. C ) Depending on the volatility of fund inflows and outflows banks adjust the amount of their reserve holdings accordingly. D ) Under instable financial conditions banks are inclined to hold higher amounts of reserves compared to normal levels.Which of the following is not one of the things that manager can do to reduce the capital ratio (increase the equity multiplier) if he or she finds that the bank has a capital surplus?O Buying back some of the bank's stock.O Paying out higher dividends to stockholders.O Selling more CDs and use the funds to invest in loans or securities.O Selling some mortgage-backed securities and use the proceeds to reduce liabilities.
- What are the basic arguments for increasing capital requirements at large commercial banks? In what ways will depositors, stockholders, and society in general benefit? How might each group be disadvantaged? As commercial banks enter new lines of business such as brokerage, how much additional capital should be required? Should these new lines of business be insured by the FDIC? Why or why not? Give examples from today’s financial marketplace.Which one of the following is NOT an implication of market efficiency for corporate finance? Group of answer choices Firms cannot successfully time issues of debt and equity Firms can successfully time issues of debt and equity Managers cannot fool the market through creative accounting Managers cannot profitably speculate in foreign currencies and other instruments Managers can reap many benefits by paying attention to market prices Which one of the following is not a characteristic of Modigliani-Miller Propositions with corporate taxes? Group of answer choices individuals and corporations borrow at the same rate There are no transaction or bankruptcy costs Corporations are taxed at the rate TC on earnings after interest There are no taxes The cost of equity rises with leverage because the risk to equity rises with leverage _______ specifies an action that the company agrees to take or a condition the company must abide by. Group of answer choices milking the property…If a bank finds that its ROE is too low because it has toomuch bank capital, what can it do to raise its ROE?
- As a bank manager, you conclude that the bank has a capital shortfall and should decrease the equity multiplier (i.e., increase the capital ratio) to prevent bank failure. Which of the following is one of things you can do to manage capital adequacy of the bank? a.Acquiring more reserves through borrowing from fed funds loansb.Selling the bank's holding of mortgage-backed securities and using the proceeds to decrease liabilitiesc.Repurchasing shares of the bankd.Increasing dividend payout ratio to reduce retained earnings.One drawback of ETFs is that investors: a) are forced to pay higher cost and fee as compared to mutual funds. b) are not able to diversify their investments. C) must pay commission when making a purchase. d) can only buy or sell shares after the major stock exchanges are closed.Stricter capital regulations such as the RBNZ’s recent increases in capital ratios will ensure that banks are more safe and the financial system is more able to withstand major adverse shocks. Is it true? Please explain. Thanks!