Homework Answers
Answer- option (d)
- Policy holders normally expected to engage in risky behaviour despite their expected loss in less than regular payments.
- Insurance policy holders are risk averse and usually prefers low risk investment options even if same return is generated from two policies.
- Lower pay off helps them to save money for future investment opportunities and less risky option will mitigate the chances of uncertainties.
Thus option (d) is the most suitable one.
All the best for your exam!
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