Firms Will Continue to Enter the Insurance Industry as Long

question 35

Multiple Choice

Firms will continue to enter the insurance industry as long as

• A) uncertainty exists
• B) there are profits to be made in selling insurance
• C) the population in the risk pool remains very small

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Definitions:

Market Capitalization

The total market value of a company's outstanding shares, calculated by multiplying the current stock price by the total number of outstanding shares.

Variance of Earnings

A statistical measure that represents the degree of variation or dispersion of a company's earnings over a specified period.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values, often used to measure the volatility of financial returns.

Diversification

An investment strategy that involves spreading investments among various financial instruments, industries, and other categories to reduce exposure to any one particular asset or risk.