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.

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Definitions:

Childish Manner

Behavior characterized by a lack of maturity, often associated with silliness, impulsivity, or dependency traits seen in children.

Defense Mechanism

Mental tactics employed by people to deal with real-life situations and preserve their sense of self.

Regression

A return to earlier stages of development in behavior, thought, or emotional functioning, often as a response to stress or trauma.

Juvenile Behavior

Actions or conduct typical of younger individuals or adolescents, often characterized by immaturity or inexperience.