Which of the Following Statements Is FALSE

question 26

Multiple Choice

Which of the following statements is FALSE?

• A)Not all insurable risks have a beta of zero. Some risks, such as hurricanes and earthquakes, create losses of tens of billions of dollars and may be difficult to diversify completely.
• B)By its very nature, insurance for no diversifiable hazards is generally a positive beta asset; the insurance payment to the firm tends to be larger when total losses are low and the market portfolio is high.
• C)Because insurance provides cash to the firm to offset losses, it can reduce the firm's need for external capital and thus reduce issuance costs.
• D)When a firm buys insurance, it transfers the risk of the loss to an insurance company. The insurance company charges an upfront premium to take on that risk.

Develop the ability to critique simulations for accuracy and realism.

Understand the use of response variables in simulations.

Learn how to simulate experiments involving probability and classical problems in statistics.

Comprehend the concept of expected value in simulations.

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Definitions:

Behaviour Modelling

A training method that involves showing employees how to perform a task or behavior by demonstrating it and then allowing them to replicate the behavior.

Managers

Individuals within an organization responsible for directing and overseeing the work of others to achieve specific objectives.

Discipline

The practice of training people to obey rules or a code of behavior, often using punishment to correct disobedience.

Role-playing

An educational or training method in which participants simulate characters or scenarios to explore behaviors, skills, or concepts in a controlled environment.