Question

What is the primary consideration in deriving a suitable risk discount rate for insurance pricing models?

a.

The historical investment performance of the insurance company

b.

The expected rate of return demanded by shareholders

c.

The company's market share in the insurance industry

d.

The current economic conditions

Answer: (b).The expected rate of return demanded by shareholders Explanation:The primary consideration in deriving a suitable risk discount rate for insurance pricing models is the expected rate of return demanded by shareholders on the capital they invest in the insurance company.

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Q. What is the primary consideration in deriving a suitable risk discount rate for insurance pricing models?

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