Risk Diversification Refers to the Process by Which

question 92

Multiple Choice

Risk diversification refers to the process by which:

• A) people organize themselves in a group to collectively absorb the cost of the risk faced by each individual.
• B) insurance companies change the risk aversion of their clients.
• C) risks are shared across many different assets or people, reducing the impact of any particular risk on any one individual.
• D) insurance companies reallocate the likelihood of catastrophes happening.

Calculate and interpret the carrying amount of an asset.

Recognize and account for gains or losses on disposal of assets.

Understand the concept and accounting treatment of asset impairment.

Determine the impact of depreciation and asset disposal on financial statements.

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Definitions:

Transmission

A system in vehicles that transmits power from the engine to the drive axle, enabling the change of gears and varying the power and speed ratio.

Output Shaft Speed

The rotational speed of the shaft that delivers power from a transmission or differential to the wheels or other driven components.

Allison Transmission

A brand known for manufacturing automatic transmissions for heavy-duty and commercial vehicles.

Planetary Gearset

A compact, round gear system that consists of a central sun gear, ring gear, and several planet gears that orbit the sun gear, used for transmission systems to provide multiple gear ratios.