Gce Model Questions Vol1 2018 Commerce Question 26

Practice objective / multiple choice question 26 from the 2018 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2018 Commerce Objective / Multiple Choice Medium Difficulty
Question 26 GCE_MODEL_QUESTIONS_VOL1 • 2018 • COMMERCE • objective

An insurance company offers a motor policy with a sum insured of \(\text{N}100{,}000\). The probability of a claim in a year is \(0.02\). Administrative expenses are \(\text{N}500\) per policy and the company wants a profit loading of \(20\%\) on the total cost (expected loss plus expenses). What premium should be charged? If a customer with a clean‑claim record receives a \(5\%\) discount on this premium, what is the discounted premium?

Answer Options

Correct Answer A. Premium = \(\text{N}3{,}000\); Discounted premium = \(\text{N}2{,}850\)
B. Premium = \(\text{N}3{,}200\); Discounted premium = \(\text{N}3{,}040\)
C. Premium = \(\text{N}3{,}000\); Discounted premium = \(\text{N}2{,}900\)
D. Premium = \(\text{N}2{,}800\); Discounted premium = \(\text{N}2{,}660\)
Correct Answer
A
Correct Option:
Premium = \(\text{N}3{,}000\); Discounted premium = \(\text{N}2{,}850\)

About This Question

This is Gce Model Questions Vol1 2018 Commerce Question 26. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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