Author Question: Which of the following statements about hedging is (are) true? I. Hedging is a form of risk ... (Read 449 times)

magmichele12 · **on:** Jul 11, 2018

Which of the following statements about hedging is (are) true? I. Hedging is a form of risk transfer. II. Hedging is used to address the risk of unfavorable price fluctuations.

A) I only
B) II only
C) both I and II
D) neither I nor II

Question 2

ABC Insurance Company plans to sell homeowners insurance in five Western states. ABC expects that 8 homeowners out of every 100, on average, will report claims each year.

The variation between the rate of loss that ABC expects to occur and the rate of loss that actually occurs is called
A) objective probability.
B) subjective probability.
C) objective risk.
D) subjective risk.