When Risks Are Shared Across Many Different Assets or People

question 80

Multiple Choice

When risks are shared across many different assets or people, reducing the impact of any particular risk on any one individual, it is called:

• A)diversification.
• B)risk pooling.
• C)risk aversion.
• D)risk analysis.

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Definitions:

Securities and Exchange Commission

A U.S. government agency responsible for enforcing federal securities laws, regulating the securities industry, and ensuring stock market integrity.

Legal Authority

An entity or institution that has the legally granted power to make decisions, and to enforce laws or rules.

Financial Statement

A summary report that comprehensively shows a company's financial performance and position at a specific point in time, including the balance sheet, income statement, and cash flow statement.

Statement of Operations

A financial report detailing a company's revenues, expenses, and profits over a specific period, also known as an income statement.