1.The annual performance of an individual or market basket of stocks in percentage terms is measured by
b.rate of return.
2.The "Needs Analysis Method" of determining how much life insurance to buy, which can also be used in determining the amount of disability coverage, consists of
a.dividing your annual income by a market interest rate.
b.multiplying your annual income by a fixed factor.
c.dividing your total wealth by a market interest rate.
d.determining your household's continuing economic expenses minus your household's existing financial resources if the adverse event occurs.
e.determining how much inheritance is appropriate for your children.
3.In the context of auto insurance, the collision and comprehensive portion covers expenses due to
a.injuries incurred by the driver and passengers in the insured vehicle.
b.injuries incurred by the driver and passengers in the other vehicle(s).
c.damages due to hit-and-run drivers.
d.damages due to uninsured drivers.
e.damage to the insured vehicle.
4.As opposed to broker markets, dealers typically _____________ within ____________.
a.arrange for sales between buyers and sellers; over the counter markets.
b.arrange for sales between buyers and sellers; exchanges.
c.conduct sales between themselves and others; over the counter markets
d.conduct sales between themselves and others; exchanges
e.work with the FDIC; their customer deposits
5.Insurance companies in general must guard against having a disproportionate number of bad risks as policyholders. For their own profitability, they need to see the total payouts for a year as a fairly small percentage of the total premiums. This fundamental problem for insurance companies is known as
e.rate of return risk.