In an Efficient Allocation of Risk

question 176

Multiple Choice

In an efficient allocation of risk:

• A)all risk is eliminated.
• B)those who are most willing to bear risk,bear it.
• C)all risk is diversified.
• D)all insurance premiums are equal to the expected value of the claims.

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Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, helping businesses manage their cash flow.

Equipment Scrapped

The disposal of assets, specifically industrial or manufacturing equipment, that are no longer useful and cannot be sold, often involving removal from the company's books and physical premises.