Risk Pooling

question 27

Multiple Choice

Risk pooling:

• A)reallocates the likelihood of catastrophes happening.
• B)reallocates the costs of catastrophes when they occur.
• C)diversifies the risk of catastrophes occurring.
• D)gathers individuals with similar risks in their life and pools them together.

Understand and calculate key financial ratios, including ROE, asset turnover, and leverage ratio.

Comprehend the concept of economic value added (EVA) and its calculation.

Identify the quality of a firm's earnings and the influence of accounting practices.

Recognize the ethical considerations and financial implications of managerial decisions on cash flow and earnings.

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Definitions:

James-Lange Theory

An idea that suggests emotional experience comes after the occurrence of physiological excitement.

Cannon-Bard Theory

A theory of emotion that proposes emotions and bodily reactions occur simultaneously in response to stimuli, contrary to earlier theories that suggest a sequential process.

Two-factor Theory

A theory suggesting emotion is based on physiological arousal and cognitive labeling of that arousal.

Schachter-Singer Theory

A theory of emotion that states emotions are determined by physiological arousal and the cognitive interpretation of that arousal.