What Is One Reason the Federal Government Might "Bail Out

question 56

Multiple Choice

What is one reason the federal government might "bail out" farmers in flood prone areas of the country?

• A) Such flooding is not diversifiable and therefore only non-profit entities, such as the federal government, can cover the risks.
• B) Such flooding is diversifiable, but insurance company CEOs are more concerned with their stockholder wealth than the well-being of farmers.
• C) Such flooding is diversifiable, but the market for such insurance policies cannot clear without the assistance of the International Community.
• D) Such flooding is known to happen on a regular basis and therefore there is no "risk" to be insured against.

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Definitions:

Revaluation Of Land

The process of adjusting the book value of land to reflect its current market value, resulting in a change in the asset's valuation on the balance sheet.

Market Value

The price at which assets or services are currently being exchanged in the marketplace.

Accumulated Depreciation

The total amount of a company's asset value that has been expensed as depreciation since the asset was acquired.

Accounts Receivable

Financial claims of a business against its customers for the provision of goods or services, which have not been paid for.