As a Result of an Internal Risk Assessment,Allstate Insurance Decided

question 24

Multiple Choice

As a result of an internal risk assessment,Allstate Insurance decided it was not profitable to provide hurricane insurance in the state of Florida.Allstate apparently chose to ________ the risk of paying hurricane claims in Florida.

• A) reduce
• B) share
• C) avoid
• D) accept

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Definitions:

Portfolio Variances

Measures the dispersion of average returns of a portfolio from its mean, indicating the level of risk involved.

Expected Return

The estimated average return on an investment, accounting for the probabilities of each possible outcome.

Undiversifiable Risk

A type of risk inherent to the entire market or market segment that cannot be mitigated through diversification.

Beta Coefficient

The beta coefficient measures the volatility of an investment in relation to the market as a whole, indicating its relative risk.