Insurance - Study Mode

[#356] Who of the below mentioned parties is not eligible to enter into a contract?
Correct Answer

(D) Minor

Explanation

Solution: Minor is not eligible to enter into a contract. Minors are individuals who are under the age of 18. Minors are not considered to have legal capacity, meaning they do not have the ability to make contracts with other people. If a minor signs a contract, they have the ability to void the deal with certain exceptions.

[#357] Proximate cause in this case is this
Correct Answer

(C) Ramesh falling off a horseback and suffers a grave injury

Explanation

Solution: Proximate cause in this case is Ramesh falling off a horseback and suffers a grave injury. Proximate Cause is the actions of the person (or entity) who owes you a duty must be sufficiently related to your injuries such that the law considers the person to have caused your injuries in a legal sense.

[#358] Which is the following item is good for wealth accumulation purposes?
Correct Answer

(B) Investment in shares

Explanation

Solution: Investment in shares is good for wealth accumulation purposes. Individuals have financial goals which motivate them to invest in specific havens. However, the choice of investment avenue can make or break the realisation of financial dreams. It is because of the forces of inflation and taxes. These tend to reduce the purchasing power of your money and impede faster wealth accumulation.

[#359] How does investment duration affect returns?
Correct Answer

(B) With greater duration of investment returns are larger

Explanation

Solution: investment duration affect returns with greater duration of investment returns are larger. Generally, the higher the duration of a bond or a bond fund (meaning the longer you need to wait for the payment of coupons and return of principal), the more its price will drop as interest rates rise.

[#360] What is responsible for a rise in general price levels of goods and services in a nation’s economy?
Correct Answer

(A) Inflation

Explanation

Solution: Inflation is responsible for a rise in general price levels of goods and services in a nation’s economy. Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over a period of time. It is the constant rise in the general level of prices where a unit of currency buys less than it did in prior periods.