please answer all multiple choice question, thanks. 1. Suppose an insurance company wishes to separate out drivers based on whether they are high-risk or low-risk drivers. It can do this by offering two different pricing schemes: one the appeals to low-risk drivers and another that appeals to high risk drivers. Which of the following pricing schemes would best appeal to a high-risk driver? NB: a deductable is the amount that the driver would have to pay in the event of a claim: a high premium but low deductable b. a high premium and high deductible c. None, high risk drivers prefer not to take out insurance. d. a low premium and high deductable 2. The incentive of imperfectly monitored workers to shirk can be reduced by: a. lower levels of monitoring and lower wages b. lower levels of monitoring and offering year-end bonuses c. higher levels of monitoring and offering year-end bonuses d. higher levels of monitoring and lower wages 3. Research has shown that investors in the stock market are often subject to a small-numbers bias, meaning that they believe that: a. high returns over the past few years are likely to be followed by more high returns over the next few years b. the stock market is a zero-sum game, where long-term gains cancel out with long-term losses. c. the likelihood of earning a steady positive return in the market over the long run is very small. d. high returns over the past few years are likely to be followed by low returns eventually over the next few years. 4. The law of large numbers: a. states that large amounts of information are often preferred to small amounts of information. b. states that the average outcome of a large number of similar events can often be predicted. c. can be used to explain why some people are risk averse and others are risk neutral or risk loving. d. can be used to explain why some people choose to self-insure against random, single and largely unpredictable events
please answer all multiple choice question, thanks.
1. Suppose an insurance company wishes to separate out drivers based on whether they are high-risk or low-risk drivers. It can do this by offering two different pricing schemes: one the appeals to low-risk drivers and another that appeals to high risk drivers. Which of the following pricing schemes would best appeal to a high-risk driver? NB: a deductable is the amount that the driver would have to pay in the event of a claim:
a high premium but low deductable
b. a high premium and high deductible
c. None, high risk drivers prefer not to take out insurance.
d. a low premium and high deductable
2. The incentive of imperfectly monitored workers to shirk can be reduced by:
a. lower levels of monitoring and lower wages
b. lower levels of monitoring and offering year-end bonuses
c. higher levels of monitoring and offering year-end bonuses
d. higher levels of monitoring and lower wages
3. Research has shown that investors in the stock market are often subject to a small-numbers bias, meaning that they believe that:
a. high returns over the past few years are likely to be followed by more high returns over the next few years
b. the stock market is a zero-sum game, where long-term gains cancel out with long-term losses.
c. the likelihood of earning a steady positive return in the market over the long run is very small.
d. high returns over the past few years are likely to be followed by low returns eventually over the next few years.
4. The law of large numbers:
a. states that large amounts of information are often preferred to small amounts of information.
b. states that the average outcome of a large number of similar events can often be predicted.
c. can be used to explain why some people are risk averse and others are risk neutral or risk loving.
d. can be used to explain why some people choose to self-insure against random, single and largely unpredictable events
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