Which of the Following Is True About Pure Risks

question 32

Multiple Choice

Which of the following is true about pure risks?

• A) The risk/return tradeoff is applicable to pure risks.
• B) A firm cannot profit from its exposure to pure risk.
• C) Risk managers must be tolerant of negative outcomes related to pure risks.
• D) Pure risk is not a source of great concern for risk managers.

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Definitions:

Constant Internal State

The concept of maintaining a stable, consistent internal environment in an organism, also known as homeostasis.

An Instinct

An innate, typically fixed pattern of behavior in animals in response to certain stimuli that is unlearned.

An Instinct

A fixed, innate pattern of behavior in animals in response to certain stimuli.

Robins

Small, common songbirds known for their reddish-orange breasts and melodious songs.