Insurance Is Not a Good Option for Managing Risk When

question 57

Multiple Choice

Insurance is not a good option for managing risk when

• A) the probability of loss is very small and the expected loss is small.
• B) the benefits outweigh the costs.
• C) you want to protect your existing and future net worth.
• D) there is a likelihood that an event will cause a large financial loss.

---

Definitions:

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Cash Flows

The overall volume of cash inflows and outflows within a corporation, impacting its availability of liquid funds.

Free Cash Flow

A financial metric that measures the amount of cash generated by a company after accounting for capital expenditures.

Net Income

The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, indicating financial performance.