assumptions_CR - Pg190onwards 193...

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Pg 190 onwards…  193 1. Technically a given category of insurance policy is under priced if, over time, claims against it plus  expenses associated with it exceed total income from premiums. But premium income can be  invested and will then yield returns of its own. Therefore, an under priced policy does not represent  a net loss in every case.  The argument above is based on which of the following assumptions? (A) No insurance policies are deliberately under priced in order to attract customers to the insurance  company offering such policies. (B) A policy that represents a net loss to the insurance company is not an under priced policy in  every case. (C) There are policies for which the level of claims per year can be predicted with great accuracy  before premiums are set. (D)  The income earned by investing premium income is the most important determinant of an  insurance company’s profits .(Surely not the answer since no mention of Profits!!) (E)   The claims against at least some under priced policies do not require paying out all of the  premium income from those policies as soon as it is earned. All seem to be incorrect  204 2. Samples from a ceramic vase found at a tomb in Sicily prove that the vase was manufactured in  Greece. Since the occupant of the tomb died during the reign of a Sicilian ruler who lived 2,700  years ago, the location of the vase indicates that there was trade between Sicily and Greece 2,700  years ago. Which of the following is an assumption on which the argument depends? 205
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