Insurance Is Not a Good Option for Managing Risk When

question 93

Multiple Choice

Insurance is not a good option for managing risk when

• A)the probability of loss is very small.
• B)the benefits outweigh the costs.
• C)you want to protect your existing and future net worth.
• D)there is a likelihood that an event will cause a large financial loss.

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Definitions:

Open Market Operations

Activities undertaken by a central bank, such as the buying or selling of government securities, to control the money supply and interest rates.

Discount Rate

The interest rate charged by the Federal Reserve to depository institutions.

Federal Reserve

The Federal Reserve is the central bank of the United States, responsible for implementing the country's monetary policy, regulating banks, maintaining financial system stability, and providing financial services.

Monetary Growth

The increase in the money supply in an economy over time, which can influence inflation rates, interest rates, and economic growth.