The correct answer is: B. In periodical valuation of assets and liabilities book value of assets is normally taken by the insurer.
The book value of an asset is its original cost, minus any depreciation or amortization that has been recorded. It is the value that is used on the balance sheet. The market value of an asset is the price that it could be sold for in the open market. The discounted present value of an asset is the present value of the future cash flows that the asset is expected to generate. The discounted future value of an asset is the future value of the cash flows that the asset is expected to generate.
In periodical valuation of assets and liabilities, the book value of assets is normally taken by the insurer. This is because the book value is a more conservative estimate of the value of the asset. The market value of an asset can be volatile, and the discounted present value or discounted future value of an asset can be difficult to estimate.
Here is a more detailed explanation of each option:
- Option A: Market value of assets is always taken by the insurer. This is not always the case. In periodical valuation of assets and liabilities, the book value of assets is normally taken by the insurer.
- Option B: In periodical valuation of assets and liabilities book value of assets is normally taken by the insurer. This is the correct answer.
- Option C: Discounted present value of the assets is taken by the insurer. This is not always the case. The discounted present value of an asset is the present value of the future cash flows that the asset is expected to generate. It can be difficult to estimate the future cash flows, and the discounted present value can be volatile.
- Option D: Discounted future value of the assets is taken by the insurer. This is not always the case. The discounted future value of an asset is the future value of the cash flows that the asset is expected to generate. It can be difficult to estimate the future cash flows, and the discounted future value can be volatile.