You just bought a new car and want to get an insurance policy for it for the next 5 years. You will either have only one car accident in year 3 with the probability of 25%, or you will have no accidents at all with the probability of 75%. The insurance company has three policies. The annual cost and the cost of having an accident under each policy is given in the following table. These payments are at the beginning of the year and start from year 0 to 4. Also, the right column shows how much money you should pay for the accident in addition to the amount which the insurance company pays for the accident. Which policy should you choose assuming you can earn 10% on your money? Annual Cost (5 payments from 0 Accident cost to you in to yr 4) as you pay case of an accident in before you need it year 3 425.00 $ 700.00 | $ 825.00 $ Plan Policy 1 High Deductible 2$ 12,000.00 Medium Deductable $ Policy 2 Policy 3 7,500.00 Low Deductable 4,400.00

Q: A loss contingency should be accrued when the amount of loss is known and the occurrence of the loss…

A: Accrued liabilities result when an expense has occurred but the payment is yet to be made for the…

Q: Broker to an issue advantages and disadvantage

A: Broker are very important in the today world because they have some advantages over other options…

Q: When the producer delivers the policy, all of the following should be explained EXCEPT? Select one:…

A: The question is based on the concept of insurance and insurance contracts. An insurance contract is…

Q: Smart contracts do all of the following except. Multiple Choice O O Define miners. Define business…

A: Smart contracts refer to a contract between two parties in the form of computer or pc code…

Q: Selecting the method or procedure that yields less net income is an application of Select one: O a…

A: Accounting principles are the set of rules and instructions which should be followed while preparing…

Q: etween: i. A Primary Market and Secondar

A: Primary Market The process through which a market becomes a source of securities is referred to as a…

Q: Residual risks are not: Group of answer choices Unmanaged risks None of the choices Net risks…

A: Residual risk refers to the risk which remains when rest of the risk is controlled.

Q: What is the difference between a Put option and a Call option? Explain. Provide examples.

A: Option is a derivative instrument which gives a choice to its buyer to buy or sell the underlying…

Q: Risk and Return are Select one: O a. Opposite relationship O b. Go together O c. None of the options…

A: risk is the probability of loss in the security  return is the reward which the security gives to…

Q: Briefly explain Option Distinguish between Call option and a put option

A: Options are financial instruments whose value is based on underlying securities. An option contract…

Q: what is the difference between a call option and a put option?

A: There are two types of options one is call option and other is put option and both are derivative…

Q: Define each of the following terms:a. Option; call option; put option

A: Options: They are money related instruments subject to the derivatives of hidden protections, for…

Q: Question 8

A: When net credit sales is divided with average accounts receivable it results in receivable turnover…

Q: Of the following, what are idea requisites for insurability? 1, losses are not definite; 2, the…

A: Requisites for Insurability There must be a sufficient quantity of identical goods, the loss must be…

Q: What is meant by the terminology that an option is in-, at-, or out-of-the-money

A: By deducting the strike price from the current value of the underlying securities, one can determine…

Q: (a) Indicate the TWO (2) advantages and THREE (3) disadvantages of using the statutory reserve…

A: a) The statutory reserve requirement (SRR) is a tool used by central banks to regulate the amount of…

Q: Which one of the following is an example of conventional form of investment?

A: Conventional investment categories includes trading investment options.

Q: Determine if this shall result in recognition of liabilities 15.Violation of the terms of agreement…

A: As per IAS 37, of IFRS Provisions, contingent liabilities and contingent assets If likelihood of…

Q: FMS option

A: Options are called financial derivatives that provide buyers with the right, but not the obligation,…

Q: This cannot be correct: I have options of this   a. (i) only b. (ii) only c. (iii) only d. (i)…

A: As per the business combination standard (IFRS 3) only acquisition method will be used for…

Q: 17. Liquidity risk is a chance that an investment cannot be easily liquidated: True False

A: As per Bartleby Honor Code, when multiple questions are asked, the expert is required only to solve…

Q: Discuss the following terms…

A: Financial market: It is the market under which bond, debentures, equities of the company are traded…

Q: What is the definition of "FMS option"?

A: Stock Option:A stock option (additionally referred to as a fairness option), offers an investor the…

Q: It is not particularly important what allocation base is used in calculating the POHR as long as it…

A: Consistency in the application of the allocation base is indeed crucial when calculating the…

Q: Which of the following exposure does not have cash flow effect? Group of answer choices Transaction…

A: The transaction that results in either cash inflow or cash outflow is supposed to affect cash flow.…

Q: The numbers indicate that it would be profitable to accept a special order. Should we consider any…

A: We often see companies receiving special orders for selling a product from some customers. To…

Q: urrent Attempt in Progress Choose the best definition of risk transfer. O Risk transfer is the…

A: In finance risk is an inherent element in any kind of investments and in any kind of financial…

Q: Santa Clara Furniture Company manufactures designer home furniture. Santa Clara uses a standard cost…

A: Lets understand the basics.Management calculates standard costs in order to compare it with actual…

Q: Project A and Project B are mutually exclusive projects, which one of the following is incorrect…

A: Mutually exclusive projects are those projects which compete each other for capital and resources.

Q: Outline 3 advantages and disadvantages of the following 1. Forward market 2. Hedging in the money…

A: (A) The forward market is a market where assets or financial instruments are traded for future…

Q: A5 1 What is the dilution of percentage ownership and dilution of market value in the context of…

A: The rights offering is a kind of financial strategy where a business entity provides rights issues…

Q: st that the various g

A: Introduction: The term Business refers to an exchange of goods and services between the buyer and…

Q: QUESTION 7 Which of the following is true regarding an IOU instrument containing the language…

A: 7.  The Instrument contains an unconditional promise to pay, and, therefore, the fact that it is an…

Q: he ex-rights price of 69.42 is not correct The value of a right of 2.58 is not correct the…

A: Right shares are issued to the existing shareholders to raise the money. The right issues are very…

Q: In what way are these two quotes equivalent? "$0.5841/SFr Bid & $0.5852/SFr Ask" "$0.5852/SFr Bid &…

A: The terms "ask" and "bid" refer to the prices at which assets like stocks, bonds, or currencies are…

Q: You agree to purchase a new vehicle from a car dealer for $36,000, and you want them to finance your…

A: The month to month installment speaks to the settled sum a borrower concurs to pay to the bank each…

Q: Evaluate in terms of the framework, why it is appropriate to capitalize borrowing costs under…

A: As per IAS 23 Borrowing Costs, borrowing costs directly attributable to the acquisition,…

Q: Forward contracts and options as hedging instruments differ as follows Group of answer choices…

A: Forward contracts are buy or sell agreement between two parties that specify the exchange of asset…

Q: Explain the advantages and disadvantages of (i) Progressive taxing system and (ii) regressive taxing…

A: Following is the answer to the question

Q: How does the fair value model differ from the revaluation model?

A: The difference between fair value and revaluation method arises when there is gain in the value of…

Q: What is the meaning of the term "FMS option?"

A: The FMS option is a type of software used by fleet management companies to track and monitor their…

Q: QUESTION 26 In terms of the float, the buyer of a product wants to A) increase the collection float;…

A: Float in terms of buyer is time delay between  buyer receiving  the invoice and  buyers account to…

Q: Which of the following is not a constraint on the fi nancial statements according to the Conceptual…

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.