Question 1

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) nE) A) and B)
F) B) and C)

Question 2

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)  $100,300E) A) and D)
F) A) and C)

Question 3

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.E) A) and C)
F) B) and C)

Question 4

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.E) A) and B)
F) A) and C)

Question 5

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.E) A) and B)
F) A) and C)

Exam 11: Time and Uncertainty

Insurance premiums often represent:

Correct Answer
verified

Risk pooling occurs when:

Correct Answer
verified

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

Correct Answer
verified

Making investments that have unrelated risks:

Correct Answer
verified

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

Correct Answer
verified

Exam 11: Time and Uncertainty

Insurance premiums often represent:

Correct AnswerverifiedShow Answer

Risk pooling occurs when:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Making investments that have unrelated risks:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified