Catastrophe Futures Contracts

question 87

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.

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Definitions:

Attribution Theory

A psychological theory that explains how individuals pinpoint the causes of their own and others' behavior and events.

Equity Theory

A theory in social psychology that proposes individuals assess the fairness of their relationships by analyzing their input and outcome ratios to those of others.

Philip Zimbardo

An American psychologist best known for his leadership of the Stanford Prison Experiment and contributions to the understanding of social psychology.

Simulated Prison Study

An experiment designed to study the psychological effects of perceived power, focusing on the struggle between prisoners and prison officers. It is often associated with the Stanford prison experiment.