22-81 Catastrophe Futures Contracts

question 56

Multiple Choice

22-81 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.

Recognize the importance of liquidity and redemption policies in hedge fund operations.

Understand the size and significance of U.S. equity markets within the global context.

Grasp the concepts of correlation between U.S. and international stock markets.

Identify countries with significant economic indicators like GDP per capita.

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Definitions:

Recently Learned Information

Refers to new knowledge or data that an individual or system has acquired in the near past.

Sensory Memory

The shortest-term element of memory, it is the ability to retain impressions of sensory information after the original stimuli have ended.

Automatic Processing

The subconscious processing of information, allowing tasks to be performed without conscious effort or attention.

Ebbinghaus

A psychologist who pioneered the experimental study of memory and is best known for his discovery of the forgetting curve and the spacing effect.