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FA 202 Flashcards

1
Q

Which of the following statements concerning the human life value concept is (are) correct?

I. It is the capitalized value of an individual’s net future earnings after subtracting self-maintenance costs.
II. It is the measure of the value of benefits that dependents can rightfully expect from their breadwinner or supporter.

A

(C) Both I and II

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2
Q

Which of the following statements regarding financial planning is correct?

(A) Most advisors and clients engage in comprehensive financial planning.

(B) In most cases, you will be addressing one or a few of the client’s most important financial needs.

(C) Most people are looking for help with financial planning, and proactively seek it out.

(D) Knowledge is the most important factor in success as a financial advisor. Activity (prospecting and approach) is secondary.

A

(B) In most cases, you will be addressing one or a few of the client’s most important financial needs.

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3
Q

The human life value concept is a measure of which of the following?

(A) the production potential of an individual over his or her life expectancy

(B) the difference between an individual’s value today and his or her value in the future

(C) the value actuaries are able to attach to the average mortality of a group of people

(D) the group sharing of losses of people exposed to a specific risk

A

(A) the production potential of an individual over his or her life expectancy

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4
Q

Which of the following statements regarding a will is correct?

I. The will is legally enforceable at death and is not operative until that time.
II. Prior to one’s death, a will cannot be amended, revoked or destroyed by the maker

A

(A) I only

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5
Q

The financial planning pyramid illustrates that the most fundamental and beginning foundation of financial planning begins with

(A) distributing estate assets

(B) accumulating retirement income and assets

(C) income tax management

(D) adequate protection and cash reserves

A

(D) adequate protection and cash reserves

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6
Q

Liability risks involve the possibility of

(A) loss of income due to disability or unemployment

(B) loss from the physical or financial injury to others

(C) indirect losses that are caused by direct losses

(D) direct loss associated with the need to repair or replace damaged or missing property

A

(B) loss from the physical or financial injury to others

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7
Q

The three major building blocks of a life insurance policy are

(A) profit, persistency, and mortality

(B) mortality, morbidity, and risk exposure

(C) liability, risk tolerance, and suitability

(D) mortality, interest, and expense

A

(D) mortality, interest, and expense

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8
Q

All of the following are correct regarding family life insurance needs EXCEPT

(A) The readjustment period is the interval of time after the insured’s death and the surviving spouse’s retirement.

(B) The dependency period extends from the insured’s death until the youngest child is self-sufficient.

(C) The blackout period lasts from the youngest child’s 16th birthday until the surviving spouse is aged 62 (reduced benefit at age 60).

(D) Cash needs include final expenses, emergency fund, and mortgage cancellation.

A

(A) The readjustment period is the interval of time after the insured’s death and the surviving spouse’s retirement

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9
Q

All of the following statements regarding insurance (risk management) principles are correct EXCEPT

(A) Insurance reduces financial risk by transferring that risk to an insurer.

(B) Insurance spreads the risk of losses to all members equitably through risk pooling.

(C) The law of large numbers states that as the size of the sample increases, the actual loss experience will more closely approximate the true underlying probability.

(D) Mortality rates reflect the income the company expects from the investment of premiums that will be added to the reserves.

A

(D) Mortality rates reflect the income the company expects from the investment of premiums that will be added to the reserves.

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10
Q

The financial statement that shows a client’s net worth at a specific point in time is called the

(A) income statement

(B) balance sheet

(C) cash flow statement

(D) budget.

A

(B) balance sheet

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11
Q

All of the following are characteristics of transactional selling EXCEPT

(A) The transactional selling relationship can be an adversarial one.

(B) The advisor must outthink, outmaneuver, and outtalk the customer.

(C) The advisor has to listen, ask questions, demonstrate empathy, and discover needs.

(D) Selling is a “numbers game.”

A

(C) The advisor has to listen, ask questions, demonstrate empathy, and discover needs.

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12
Q

The last step of the five-step buyer’s cycle is

(A) make a purchase

(B) buyer’s satisfaction

(C) take delivery

(D) continuously monitor the plan

A

(C) take delivery

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13
Q

Which of the following statements concerning selling is (are) correct?

I. Transactional selling focuses on the product and the sale.
II. Client-focused selling builds relationships with clients.

A

(C) Both I and II

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14
Q

Which of the following statements regarding compliance and ethics is (are) correct?

I. Compliance means following laws and regulations.
II. Ethics means behaving according to the principles of right and wrong accepted by your profession.

A

(C) Both I and II

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15
Q

The sales method that emphasizes a quick sale, then moving on to the next sale is called

(A) counselor selling

(B) transactional selling

(C) client-focused selling

(D) transcendental selling

A

(B) transactional selling

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16
Q

Which of the following is a step in the selling/planning process (as opposed to the financial planning process)?

(A) Meet the Prospect

(B) Establish Financial Goals

(C) Develop a Plan to Achieve Goals

(D) Monitor the Program

A

(A) Meet the Prospect

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17
Q

All of the following are steps in the selling/planning process EXCEPT

(A) Identify the Prospect

(B) Obtain Referrals

(C) Implement the Plan

(D) Meet the Prospect

A

(B) Obtain Referrals

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18
Q

When replacement is involved in a sale, many states require the advisor, in addition to forms required in all sales, to deliver a

(A) policy summary

(B) notice regarding replacement and comparative information form

(C) buyer’s guide

(D) IMSA Code of Life Insurance Ethical Market Conduct

A

(B) notice regarding replacement and comparative information form

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19
Q

Before a company can offer to sell a product, the company must be formally admitted by the

(A) federal government through the Securities and Exchange Commission

(B) National Association of Insurance Commissioners

(C) company who will sponsor it

(D) insurance department of the state where it will be sold

A

(D) insurance department of the state where it will be sold

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20
Q

For a prospect to initiate the buying cycle, he or she must first

(A) desire a solution

(B) recognize the need or problem

(C) make the purchase

(D) decide on the best available choice

A

(B) recognize the need or problem

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21
Q

Which of the following typically occur(s) in the initial interview? I. Uncover insurance and other financial needs and determine priorities. II. Obtain the prospect’s permission to proceed, and commitment to work with you.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(C) Both I and II

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22
Q

All of the following are benefits to the prospect of a total-needs approach: EXCEPT

(A) Insurance needs are met within the context of the plan.

(B) The planner becomes a trusted and respected professional adviser.

(C) The prospect is provided with a complete understanding of the needs to be fulfilled.

(D) All prospect needs are met with standardized solutions.

A

(D) All prospect needs are met with standardized solutions.

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23
Q

Which of the following statements concerning rapport building is (are) correct? I. Intent involves the perception of one’s motives, the prospect’s perception of an advisor’s interest in helping and benefiting the client. II. Competence centers on the expectations of what the prospect considers proper business customs, dress, and behavior.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(A) I only

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24
Q

In the initial interview, you should try to achieve all of the following EXCEPT

(A) Create a sense of rapport and credibility, and build trust.

(B) Uncover insurance and other financial needs and determine priorities.

(C) Develop alternative solutions for the prospect’s needs.

(D) Obtain the prospect’s permission to proceed and commitment to work with you.

A

(C) Develop alternative solutions for the prospect’s needs.

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25
Q

You should try to achieve all of the following in the initial interview EXCEPT

(A) Establish yourself as a person who can help.

(B) Create a discovery agreement.

(C) Create rapport and build trust and credibility.

(D) Obtain the prospect’s permission to proceed and a commitment to work with you.

A

(B) Create a discovery agreement.

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26
Q

A single- or dominant-need sale is best thought of as an opportunity

(A) to sell a product and then move on to another prospect quickly

(B) to open up a relationship with a client that will lead to total-needs sales

(C) to work with complex situations and more advanced analyses and solutions

(D) to close quickly if either you or the prospect is not prepared for the interview

A

(B) to open up a relationship with a client that will lead to total-needs sales

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27
Q

In which of the following situations would a single-interview sale be appropriate?

(A) The prospect desires a comprehensive, total needs analysis.

(B) The prospect wants to fulfill an obligation, such as a condition for a loan or a divorce decree

(C) The spouse, who should be part of the discussion, is not available.

(D) You obtained an interview by promising to be professional and thorough.

A

(B) The prospect wants to fulfill an obligation, such as a condition for a loan or a divorce decree

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28
Q

Which of the following statements best describes empathy?

(A) Empathy is the ability to see things from the prospect’s point of view.

(B) If you do not know something, you admit it and find the answer.

(C) Empathy means stating your purpose in a clear and understandable manner.

(D) People feel comfortable with people like themselves.

A

(A) Empathy is the ability to see things from the prospect’s point of view.

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29
Q

All of the following are reasons for conducting a multiple-interview sale EXCEPT

(A) You need to get information from the prospect’s other professional advisors.

(B) You obtained an interview with a prospect by promising to be professional and thorough.

(C) A dominant need is the prospect’s primary concern.

(D) The information to be assembled and understood requires additional time to analyze.

A

(C) A dominant need is the prospect’s primary concern.

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30
Q

Your manners, appearance, and confidence will create an immediate impression with the prospect and refer to the aspect of developing rapport called

(A) propriety

(B) competence

(C) commonality

(D) intent

A

(A) propriety

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31
Q

The best questions to begin an interview are

(A) open-ended

(B) leading

(C) referral driven

(D) closed-ended

A

(A) open-ended

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32
Q

The discovery agreement typically contains all of the following EXCEPT

(A) the prospect’s current status: the facts and observations about his/her situation, including attitudes, values, and relevant issues

(B) the prospect’s goals and their desired status

(C) recommendations for solutions to shortcomings in the current plan

(D) recommendations for the next step

A

(C) recommendations for solutions to shortcomings in the current plan

33
Q

Objectives of the advisor in the information-gathering interview include all of the following EXCEPT

(A) Communicate the process to the client.

(B) Completion of fact-finding and feeling-finding information gathering.

(C) Identify and prioritize goals, needs, and objectives.

(D) Analyze the data and recommend solutions to the gaps between existing resources and goals.

A

(D) Analyze the data and recommend solutions to the gaps between existing resources and goals.

34
Q

In the sales process, the main objective of gathering information from the prospect by the advisor is to

(A) begin the underwriting process, with the advisor acting as field underwriter

(B) obtain referrals

(C) sell the advisor’s skills and competence

(D) uncover meaningful information by asking appropriate questions

A

(D) uncover meaningful information by asking appropriate questions

35
Q

Which of the following statements is an example of an open-ended question?

(A) “Do you want to cover the cost of higher education with insurance?”

(B) “What are your hopes and dreams for your children’s education?”

(C) “How much do you think college will cost when your kids are ready to go?”

(D) “Are your parents alive?”

A

(B) “What are your hopes and dreams for your children’s education?”

36
Q

Which of the following documents should the prospect typically have ready for your review?

(A) wills, insurance policies, and employee benefit information

(B) birth certificate, passport, and Social Security information

(C) charge card numbers, employer references, and credit history

(D) personal biography, photos, and driver’s license number

A

(A) wills, insurance policies, and employee benefit information

37
Q

Which of the following statements concerning the objectives of the information-gathering interview is (are) correct? I. Get a dollar commitment. II. Identify and prioritize goals, needs, and objectives.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(C) Both I and II

38
Q

Which of the following statements regarding effective communication with prospects is (are) correct? I. In effective communication, we should assume we understand the prospect’s message. II. Nonverbal behavior channels communicate about two-thirds or more of the message.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(B) II only

39
Q

Leaning back, crossing arms over the chest, propping feet up on the table, and losing eye contact are all typically nonverbal signs that

(A) interest in the topic is decreasing

(B) interest in the topic is increasing

(C) the prospect is pressed for time

(D) the prospect wants to be more involved in the conversation

A

(A) interest in the topic is decreasing

40
Q

An example of a leading question is

(A) “Do you really think $100 per month is enough?”

(B) “How much is your annual income?”

(C) “Tell me about your plans for your children’s education.”

(D) “What is your most important financial goal?”

A

(A) “Do you really think $100 per month is enough?”

41
Q

Flexible spending accounts are employee benefit plans designed to do which of the following?

(A) Allow employees to pay for noncovered medical expenses with pre-tax income.

(B) Provide an employee’s salary to continue at retirement, death, or disability.

(C) A portion of an employee’s compensation is postponed until retirement, death, or disability.

(D) Employees may purchase life insurance using a payroll deduction plan administered by the employer.

A

(A) Allow employees to pay for noncovered medical expenses with pre-tax income.

42
Q

Shortcomings of the multiple of income method of determining an insurance need include all of the following EXCEPT

(A) There are large differences in the multiples that are recommended.

(B) It is easy to explain and requires few calculations.

(C) It does not take into account important differences in people’s lives.

(D) It ignores the financial and personal situation of the individual.

A

(B) It is easy to explain and requires few calculations.

43
Q

The pension plan based on an annual contribution formula applied to an employee’s earnings, offering no guarantees about the size of the participant’s monthly pension benefit, is which of the following standard plans?

(A) 401(k) plans

(B) profit-sharing plans

(C) defined-benefit plans

(D) defined-contribution plans

A

(D) defined-contribution plans

44
Q

Which of the following statements concerning the capital-needs-analysis approach to calculating the insurance need on the family income earner is (are) correct? I. Divide the income amount by the applicable interest rate representing the after-tax investment return anticipated on the capital sum. II. The lower the after-tax investment return rate, the higher the capital fund needed to produce the same amount of income.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(C) Both I and II

45
Q

Under Sec. 79 of the Internal Revenue Code, the first _______ of group insurance is not considered taxable income to the employee.

(A) $25,000

(B) $50,000

(C) $100,000

(D) $150,000

A

(B) $50,000

46
Q

Every person has an economic value in life associated with

(A) his or her capitalized potential earning ability

(B) the amount of life insurance owned

(C) Social Security eligibility

(D) standard of living

A

(A) his or her capitalized potential earning ability

47
Q

Which of the following statements is (are) true regarding life insurance planning? I. A major shortcoming of the capital conservation method is that the capital fund may be totally liquidated before the beneficiary’s death. II. The capital distribution method takes into account present resources of funds that may be used to help meet lump-sum and ongoing income needs.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(B) II only

48
Q

The basic assumption the agent must make when planning the face amount of the life insurance to present to a prospect is that the prospect will

(A) die today

(B) die sometime around life expectancy

(C) need a specific multiple of income, such as 3 times or 5 times his or her income

(D) know how much insurance is needed and work with that figure

A

(A) die today

49
Q

The normal retirement age under Social Security for someone born in 1958 is

(A) 62

(B) 65 and 4 months

(C) 66

(D) 66 and 8 months

A

(D) 66 and 8 months

50
Q

The definition of disability for Social Security includes all of the following EXCEPT

(A) The waiting period for application is 5 months.

(B) The disability must be expected to result in death or to last for at least 12 months.

(C) The disability must prevent the worker from engaging in a substantially gainful activity.

(D) The disability must commence before age 22

A

(D) The disability must commence before age 22

51
Q

The level-premium concept creates which of the following results when purchasing an ordinary life policy?

(A) It is the most expensive form of cash value insurance.

(B) It matures at age 65.

(C) It has an increasing cash value and decreasing risk amount.

(D) Both the cash value and amount at risk increase annually.

A

(C) It has an increasing cash value and decreasing risk amount.

52
Q

The standard policy design upon which variable life, interest-sensitive whole life, adjustable life, and universal life are based is

(A) annual renewable term insurance

(B) endowment life insurance

(C) permanent life insurance

(D) industrial life insurance

A

(C) permanent life insurance

53
Q

The most likely marketing application of a life paid-up at 65 policy would be the prospect who

(A) wants to pay a minimum premium for the minimum number of years possible

(B) needs permanent protection for only a specific number of years

(C) wants to create a personal, qualified retirement plan through life insurance

(D) wants to emphasize cash growth and stop paying premiums at age 65

A

(D) wants to emphasize cash growth and stop paying premiums at age 65

54
Q

Which of the following statements concerning methods for determining the cost of life insurance is (are) correct? I. The net payment index is useful in comparing costs when the death benefit is emphasized. II. The net payment cost index takes into account premiums, dividends, and cash values.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(A) I only

55
Q

Which of the following best describes a 20-year decreasing-term policy?

(A) The policy premiums decrease while the death benefit remains level for 20 years .

(B) Both premiums and death benefit decrease.

(C) The death benefit decreases while the premium remains the same.

(D) The death benefits decreases while the premiums increase.

A

(C) The death benefit decreases while the premium remains the same.

56
Q

Which of the following statements concerning limited-pay whole life insurance is (are) correct? I. The limitation on the number of premiums to be paid may be expressed as either a number of years or an age beyond which premiums are not payable. II. If the insured dies during the premium-paying period, the total premiums paid will exceed those paid for an ordinary life policy of the same face amount issued at the same age.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(C) Both I and II

57
Q

Which of the following statements concerning yearly renewable term is correct?

(A) The insurance company may experience some adverse selection at renewal time.

(B) The premiums increase either every 5 or 10 years.

(C) Evidence of insurability must be furnished at the time of each renewal.

(D) The insured can renew the policy each year by completing a medical exam.

A

(A) The insurance company may experience some adverse selection at renewal time.

58
Q

If a policy becomes a modified endowment contract (MEC),

(A) the death benefits will become income taxable

(B) the policy will lose its tax-deferred status

(C) tax free withdrawals to the cost basis of payments are permitted

(D) distributed gains are subject to a 10 percent penalty prior to age 59œ

A

(D) distributed gains are subject to a 10 percent penalty prior to age 59œ

59
Q

All of the following statement concerning universal life are correct EXCEPT

(A) The level death benefit option has a constant amount at risk to the insurer.

(B) If the universal life policy is under-funded, the policyowner has the choice to either (a) increase the premium or (b) reduce the face amount.

(C) Universal life policies do not require premium after the first policy year if the policy’s cash value is adequate to cover the next 60 days of expenses and mortality charges.

(D) Money can be withdrawn without creating a loan or interest payments.

A

(A) The level death benefit option has a constant amount at risk to the insurer.

60
Q

All of the following statements concerning the interest-adjusted indices are true EXCEPT

(A) The NAIC developed these methods and model regulations for adopting their use.

(B) These methods treat premium payments as if they were put into an interest-bearing account to accumulate to the end of the interval.

(C) The net payment cost index is similar to the surrender cost index except it does not consider cash value at the end of the interval.

(D) The surrender cost index is useful in comparing costs when death benefit protection is emphasized.

A

(D) The surrender cost index is useful in comparing costs when death benefit protection is emphasized.

61
Q

Which of the following is true concerning a prospect’s questions, concerns, objections, and excuses?

(A) All questions and concerns are excuses, and not really objections or real issues.

(B) All the prospect’s questions and concerns are objections, not necessarily excuses.

(C) Not all questions and concerns are objections; some may be just excuses.

(D) A prospect will always ask questions and make comments as a smoke screen to avoid buying.

A

(C) Not all questions and concerns are objections; some may be just excuses.

62
Q

All of the following statements are included in taking a problem-solving approach to objections EXCEPT

(A) building trust and rapport with the prospect

(B) dealing with the needs involved, not personalities

(C) instilling a sense of urgency

(D) implying that the prospect really does not love his or her family

A

(D) implying that the prospect really does not love his or her family

63
Q

Which of the following statements regarding underwriting outcomes are correct?

(A) Only 3 percent of issued policies are rated, while only another 2 percent are declined.

(B) About 90 percent of all applications are issued as standard or better.

(C) About 7 percent of issued polices are substandard and about 5 percent are declined.

(D) Underwriting is becoming more stringent, with about 12 percent of life insurance applications being given substandard ratings or declinations.

A

(A) Only 3 percent of issued policies are rated, while only another 2 percent are declined.

64
Q

An applicant for life insurance may be classified as a substandard risk for several reasons. One of these is the applicant’s

(A) gender

(B) health

(C) marital status

(D) current level of earned income

A

(B) health

65
Q

The most compelling reason for getting cash with the application is a matter of

(A) meeting company sales goals

(B) putting the insurance in force

(C) getting your commission on time

(D) guaranteeing that the prospect is serious about wanting life insurance

A

(B) putting the insurance in force

66
Q

Which of the following statements concerning closing techniques is (are) correct? I. The decision to buy is not directly asked and presumes the prospect has decided to buy with the implied consent technique. II. “Are you ready to start this plan?” is an example of the direct question technique.

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

A

(C) Both I and II

67
Q

All of the following are steps in the process for responding to objections EXCEPT

(A) Listen to the Prospect

(B) Rephrase What the Prospect Has Told You

(C) Use the “Yes, but” Approach to Dealing with Objections

(D) Wait for the Prospect to Respond After You Rephrase Their Concern

A

(C) Use the “Yes, but” Approach to Dealing with Objections

68
Q

Which of the following statements regarding life insurance applications is (are) true?

I. If the insured is to be someone other than the applicant, you will typically need the signatures of both the applicant and the insured.
II. If the insured is a minor, you will need the signature of a parent or guardian.

A

(C) Both I and II

69
Q

When is an insurance contract completed?

(A) when the prospect signs the application

(B) when the prospect makes a premium payment

(C) when the beneficiary receives the policy proceeds

(D) when the policy is recorded in the insurer’s home office

A

(B) when the prospect makes a premium payment

70
Q

All of the following are purposes of the underwriting process EXCEPT

(A) Analyze the risks of prospective insureds.

(B) Determine the appropriate premium to charge.

(C) Reject clearly unacceptable risks.

(D) The first step in the process to eliminate unacceptable risks is the medical exam.

A

(D) The first step in the process to eliminate unacceptable risks is the medical exam.

71
Q

Premiums paid for individual life insurance policies in the United States are usually tax deductible for income tax purposes in all of the following circumstances EXCEPT

(A) life insurance in an alimony agreement

(B) premiums paid for individually owned life insurance on a family member

(C) life insurance that is owned by and paid to a charity as beneficiary

(D) premiums paid by a business in the form of a bonus (salary) to an employee

A

(B) premiums paid for individually owned life insurance on a family member

72
Q

The spendthrift clause is intended to protect life insurance

(A) against attachment of proceeds by the insured’s creditors

(B) proceeds against attachment by the surviving spouse’s creditors

(C) proceeds against attachment by the beneficiary’s creditors

(D) policies against attachment by both the insured’s and the beneficiary’s creditors

A

(C) proceeds against attachment by the beneficiary’s creditors

73
Q

Mr. Jackson owns an insurance policy on the life of his daughter Julie’s new husband, Andy. Julie will be the irrevocable beneficiary. Whose signature(s) will be needed on the policy change forms in the future?

(A) Mr. Jackson

(B) Mr. Jackson, Andy, and Julie

(C) Mr. Jackson and Julie

(D) Mr. Jackson and Andy

A

(C) Mr. Jackson and Julie

74
Q

Which of the following is the settlement option that will pay both principal and interest until a specific time period is over?

(A) life income

(B) fixed-period income

(C) specified amount

(D) interest income

A

(B) fixed-period income

75
Q

Which of the following is a settlement option for the death proceeds of a life insurance policy?

(A) extended term

(B) lump sum payment

(C) paid-up additions

(D) life income

A

(D) life income

76
Q

To avoid potential problems at the insured’s death when naming children as beneficiaries, one should

(A) always name the family, not the children, so all family members are beneficiaries

(B) name the surviving parent or a trustee to have full control of the proceeds during the child’s minority

(C) never name children as beneficiaries of life insurance, to avoid problems

(D) name the children as a class of beneficiary, so that those born or adopted later will not share in the proceeds

A

(B) name the surviving parent or a trustee to have full control of the proceeds during the child’s minority

77
Q

It is not recommended that the estate of the insured be named as the policy’s beneficiary except when

(A) there is no spouse

(B) the insured is elderly

(C) proceeds will just cover debts and the estate’s settlement

(D) there is a executor named in the will

A

(C) proceeds will just cover debts and the estate’s settlement

78
Q

The insured and the primary beneficiary of a policy die in a common accident. The primary beneficiary lives in a coma for one week after the insured’s death, then dies. If the interest settlement option rather than the lump-sum cash settlement had been chosen, whose interests would have been protected by a common disaster clause?

(A) primary beneficiary

(B) primary and contingent beneficiaries

(C) contingent beneficiary

(D) primary beneficiary and insured’s interest

A

(C) contingent beneficiary

79
Q

Life insurance is an aleatory contract, which means it is one in which

(A) both parties contribute to the terms and conditions of the contract

(B) the values exchanged are not equal and are subject to an element of chance and uncertainty

(C) only one party makes a legally enforceable promise

(D) one party has the option of affirming or denying the contract

A

(B) the values exchanged are not equal and are subject to an element of chance and uncertainty

fscp 201 (6 decks)

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