Multiple choice

How are the two paragraphs related to each other?

Directions: Answer the given question based on the following passage:

Family support could not always be counted upon for providing sustenance to people who had lived too long and had exhausted their life savings. Up until a few centuries ago, societies had not evolved enough to handle the issue of citizens that had grown to be a liability for them. The sick, the needy, and the destitute would be dependent upon various religious organizations, the sympathy of the neighbors and the largesse of those who wanted an easy passage into the next life. In some ancient civilizations there existed an elementary form of social security in which individuals, known to each other, would come together to form a kind of a mutual fund wherein each member would contribute a fixed weekly amount in a common pool of resources. The resources thus collected would be used to pay for the burial expenses of the members of the informal trust, or, in case of the member living beyond working age, cover part of his living expenses.
Modern actuarial science did not have its genesis till late in the seventeenth century when the first life table, or the pattern of predictability of the life span, of the members of a cohort was first devised. Insurance companies used the table to find out the financial feasibility and the costs of insuring different cohorts. Today, the field is ranked among the top three most valuable fields for humanity. Though initial application was more or less limited to insurance companies, today the science finds application in the business of governance as well. Today, using an amalgam of various disciplines such as economics, mathematics, probabilities and statistics, actuarial sciences help in predicting consumer behavior, asset management, and many other fields.

 

  1. Both the paragraphs elucidate the factors behind, and the need for financial planning and risk management.

  2. The second paragraph explains the concept, the foundation for which has been laid in the first paragraph.

  3. The first paragraph gives a reason for the discipline described in the second paragraph coming about.

  4. The second paragraph restates the information given in the first paragraph.

  5. Both the paragraphs talk about unrelated topics.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

(1) Incorrect; though the first paragraph touches upon the factors behind the need to make provisions for an uncertain future, the second paragraph does not. (2) Incorrect; the first paragraph talks of the need for insurance while the second paragraph describes the evolution of actuarial sciences.  (3) Correct; actuarial sciences came about because of their application in the insurance industry. The need for insurance is described in the first paragraph. (4) Incorrect; the first paragraph talks mainly of why insurance came about. Although there is a certain common ground, the second paragraph talks mainly about the development of actuarial sciences. (5) Incorrect; the first paragraph lays the background for the genesis of actuarial sciences. Hence, some relation is manifest.