Catastrophe Futures Contracts

question 32

Multiple Choice

Catastrophe futures contracts

• A)are designed to protect life insurance companies from the effects of natural disasters in which large numbers of lives are lost.
• B)are designed to protect property-casualty insurers against the extreme losses that can occur in hurricanes.
• C)are designed to hedge insurance companies from liability law suits.
• D)provide a payoff when the actual loss ratio is less than the expected loss ratio.
• E)provide a payoff to the seller of the contract that is equal to the loss ratio times the nominal value of the contract.

---

Definitions:

Trademark

A symbol, word, or phrase legally registered or established by use as representing a company or product.

Chain-style Business

A business model where multiple outlets are owned, franchised, or managed under a single brand or corporation.

Franchisor's Standards

Regulations and expectations set by the franchisor that the franchisee is required to follow to maintain the consistency and quality of the brand.

Franchise

A licensed privilege to operate a business under a larger company's brand and operational model, often including a specific geographic area.