Consider an Electric Utility That May Use Either Coal or Natural

question 47

Multiple Choice

Consider an electric utility that may use either coal or natural gas to generate electricity. Under which of the following conditions is co-firing equipment least valuable? Let a_c be the annual standard deviation of coal prices, and let a_n be the annual standard deviation of natural gas prices and p the correlation between coal prices and natural gas prices.

• A)a_c high, a_n high, p low
• B)a_c high, a_n low, p low
• C)a_c low, a_n high, p low
• D)a_c low, a_n low, p high

---

Definitions:

Defensive Medicine

The practice by healthcare providers of ordering tests, treatments, or procedures primarily to protect themselves from litigation, rather than to benefit the patient's health.

Health Care

The maintenance or improvement of health via the prevention, diagnosis, treatment, recovery, or cure of illness, injury, and other physical and mental impairments in people.

Insurance

A financial product sold by insurance companies to safeguard individuals and businesses against financial risk or loss.