Which of the Following Statements Regarding Insurance and Hedging Is

question 4

Multiple Choice

Which of the following statements regarding insurance and hedging is true?

• A)Both insurance and hedging deal only with pure risks.
• B)Insurance reduces objective risk while hedging involves only risk transfer and not risk reduction.
• C)Hedging reduces objective risk while insurance involves only risk reduction and not risk transfer.
• D)Both insurance and hedging reduce objective risk but do not involve the transfer of risk.

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Definitions:

Morale Problems

Issues related to the decline in confidence, enthusiasm, discipline, and satisfaction among members of a group or organization.

High Performance

The achievement of significantly better outcomes or higher efficiency levels than standard benchmarks or expectations.

Financial Capital

Financial capital refers to the funds that are available to invest in a business's operations, projects, or expansions, crucial for growth and development.

Visionary Leaders

Leaders who have the ability to see the potential future of their organization or field and guide others toward that vision.