Catastrophe Reinsurance Can Be Described as a Form of Excess

question 59

True/False

Catastrophe reinsurance can be described as a form of excess of loss reinsurance.

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Definitions:

Excess Returns

Returns earned by an asset that exceed the risk-free rate of return, indicating the additional gain from taking on risk.

Risk-free Asset

A financial instrument that is considered to have no risk of financial loss, typically issued by a government.

Sharpe Measure

A method to evaluate the risk-adjusted return of an investment, comparing portfolio excess return to the standard deviation of the portfolio.

Excess Returns

The return on an investment above the return expected from risk-free investments or the market's benchmark.