Hello, I'm having a bit of trouble with two questions:
1. Phoenecia deposits $300 into a simple interest account that pays 3%. After 7 months what will be the total value of her account?
(A)$309.00 (B)$305.25 (C)$321.00 (D)$9.00
2. Which of the following help to reduce an insurance company's share of risk? (A) waiting period (B) deductibles (C) co-insurance (D) all of these
We'll be glad to check your answers.
Btw -- without doing the math, you can easily see the only possible correct answer for the first problem.
Sure! Let's break down each question and go through the steps to find the answers:
1. To calculate the total value of the account, we need to use the formula for simple interest:
Simple Interest = Principal * Rate * Time
In this case, the principal (P) is $300 and the rate (R) is 3%. The time (T) is given as 7 months.
To calculate the interest:
Interest = Principal * Rate * Time
= $300 * 3% * 7/12
Now, to find the total value of the account, we add the interest to the principal:
Total Value = Principal + Interest
= $300 + (Interest calculated above)
Calculating the interest and adding it to the principal will give us the total value of the account after 7 months.
2. The question asks which of the following help to reduce an insurance company's share of risk. Let's go through each choice:
(A) Waiting period: A waiting period is the amount of time a policyholder has to wait before certain coverages or benefits become effective. While it may reduce the insurance company's risk in certain situations, it does not directly reduce the company's share of risk.
(B) Deductibles: A deductible is the amount the policyholder must pay out-of-pocket before the insurance company starts to cover the expenses. By shifting part of the risk to the policyholder, deductibles help reduce the insurance company's share of risk.
(C) Co-insurance: Co-insurance refers to the percentage of costs shared between the policyholder and the insurance company after the deductible has been met. Similar to deductibles, co-insurance allows the insurance company to shift part of the risk to the policyholder.
(D) All of these: Since both deductibles and co-insurance help reduce the insurance company's share of risk, the correct answer is (D) all of these.
I hope these explanations help you understand how to approach these questions. If you have any further questions, feel free to ask!