QUESTION: 373

Insurance Company X is considering issuing a new policy to cover services required by elderly people who suffer from diseases that afflict the elderly. Premiums for the policy must be low enough to attract customers. Therefore, Company X is concerned that the income from the policies would not be sufficient to pay for the claims that would be made.
Which of the following strategies would be most likely to minimize Company X’s losses on the policies?

Attracting middle-aged customers unlikely to submit claims for benefits for many years
Insuring only those individuals who did not suffer any serious diseases as children
Including a greater number of services in the policy than are included in other policies of lower cost
Insuring only those individuals who were rejected by other companies for similar policies
Insuring only those individuals who are wealthy enough to pay for the medical services

Answer(s): A

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QUESTION: 374

A program instituted in a particular state allows parents to prepay their children’s future college tuition at current rates. The program then pays the tuition annually for the child at any of the state’s public colleges in which the child enrolls. Parents should participate in the program as a means of decreasing the cost for their children’s college education.
Which of the following, if true, is the most appropriate reason for parents not to participate in the program?

The parents are unsure about which pubic college in the state the child will attend.
The amount of money accumulated by putting the prepayment funds in an interest-bearing account today will be greater than the total cost of tuition for any of the pubic colleges when the child enrolls.
The annual cost of tuition at the state’s pubic colleges is expected to increase at a faster rate than the annual increase in the cost of living.
Some of the state’s public colleges are contemplating large increases in tuition next year.
The prepayment plan would not cover the cost of room and board at any of the state’s public colleges.

Answer(s): B

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QUESTION: 375

Company Alpha buys free-travel coupons from people who are awarded the coupons by Bravo Airlines for flying frequently on Bravo airplanes. The coupons are sold to people who pay less for the coupons than they would pay by purchasing tickets from Bravo. This marketing of coupons results in lost revenue for Bravo.
To discourage the buying and selling of free-travel coupons, it would be best for Bravo Airlines to restrict the

number of coupons that a person can be awarded in a particular year
use of the coupons to those who were awarded the coupons and members of their immediate families
days that the coupons can be used to Monday through Friday
amount of time that the coupons can be used after they are issued
number of routes on which travelers can use the coupons

Answer(s): B

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QUESTION: 376

The ice on the front windshield of the car had formed when moisture condensed during the night. The ice melted quickly after the car was warmed up the next morning because the defrosting vent, which blows only on the front windshield, was turned on full force.
Which of the following, if true, most seriously jeopardizes the validity of the explanation for the speed with which the ice melted?

The side windows had no ice condensation on them.
Even though no attempt was made to defrost the back window, the ice there melted at the same rate as did the ice on the front windshield.
The speed at which ice on a window melts increases as the temperature of the air blown on the window increases.
The warm air from the defrosting vent for the front windshield cools rapidly as it dissipates throughout the rest of the car.
The defrosting vent operates efficiently even when the heater, which blows warm air toward the feet or faces of the driver and passengers, is on.

Answer(s): B

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QUESTION: 373

QUESTION: 374

QUESTION: 375

QUESTION: 376