Which of the following statements is FALSE? (4 marks) Select one: O a. After purchasing fire insurance, a firm may have a lower incentive to make expenditures on fire prevention. ob. If clients have more private information about how risky they are, other things equal, insurance companies should set lower premiums. O c. In a perfect market without frictions, insurance companies should compete until they are just earning a fair return and the NPV from selling insurance is zero. The NPV is zero if the price of insurance equals the present value of the expected payment; in that case, we say the price is actuarially fair. O d. Certain risks like natural disasters may bring losses of billions of dollars, making it difficult to diversify these risks completely. Which of the following statements is FALSE? (4 marks) Select one: O a. After purchasing fire insurance, a firm may have a lower incentive to make expenditures on fire prevention. ob. If clients have more private information about how risky they are, other things equal, insurance companies should set lower premiums. O c. In a perfect market without frictions, insurance companies should compete until they are just earning a fair return and the NPV from selling insurance is zero. The NPV is zero if the price of insurance equals the present value of the expected payment; in that case, we say the price is actuarially fair. O d. Certain risks like natural disasters may bring losses of billions of dollars, making it difficult to diversify these risks completely