life and Health Insurance - FIN-3660

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Five years ago, Shannon decided to start investing. She likes ABC Telecom Company, and she invests in the company each month. As ABC Telecom is the only company in which she invests, Shannon's financial well-being will be harmed if the price of ABC Telecom stock drops significantly. The risk of investment loss can be reduced if Shannon invests in other companies and other types of financial assets. For Shannon, the risk she faces with regard to her investments is a(n)

Question 24 options:

1)	enterprise risk.

2)	diversifiable risk.

3)	pure risk.

4)	nondiversifiable risk.

The annual premium rate for a $500,000 life insurance policy is expressed as $4 per $1,000 of coverage. The annual premium amount for this policy is

Question 23 options:

$20

$200

$2,000

$20,000

Question 21 (4 points)

Question 21 Unsaved

Conversion of term insurance to whole life on a retroactive basis may require a payment to the insurer.

Question 21 options:

	1) True
	2) False

Question 15 (4 points)

Question 15 Unsaved

If there were no restrictions on the period during which yearly renewable term insurance one an individual basis could be renewed, the insurance company would eventually be faced with adverse selection.

Question 15 options:

	1) True
	2) False

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Question 16 (4 points)

Limited-payment life insurance policies will have higher cash values than ordinary life policies for the same face amount issued at the same age in the same year.

Question 16 options:

	1) True
	2) False

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Question 17 (4 points)

The renewability provision in term life insurance protects life insurers from adverse selection at each renewal.

Question 17 options:

	1) True
	2) False

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Question 18 (4 points)

Term life insurance is not the appropriate type of policy for hedging a loan repayment.

Question 18 options:

	1) True
	2) False

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Question 19 (4 points)

Under fixed-premium policies many insurers allow prepayment of premiums.

Question 19 options:

	1) True
	2) False

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Question 12 (4 points)

Consider the following consolidations in the financial services industry: Oak Financial Services and the Pine Bank recently consolidated to form one financial services corporation. After the consolidation, Pine Bank survived as a legal entity, and Oak Financial Services ceased to exist. Emerald Financial Services purchased a controlling interest in Diamond Insurance. After this consolidation, both Emerald Financial Services and Diamond Insurance survived as separate legal entities. From the following answer choices, select the response that correctly indicates whether each consolidation transaction is a merger or an acquisition. Oak and Pine transaction Emerald and Diamond transaction

Question 12 options:

1)	acquisition acquisition

2)	acquisition merger

3)	merger acquisition

4)	merger merger

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Question 2 (4 points)

Term insurance is comparable to property insurance in that both provide coverage for a limited duration.

Question 2 options:

	1) True
	2) False