Insurance Coverage Is an Example of Risk Transfer

question 22

True/False

Insurance coverage is an example of risk transfer.

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Definitions:

Equally-Weighted Portfolio

An investment portfolio where each asset is allocated the same percentage of total investment capital.

Securities

Financial instruments that hold some type of monetary value, such as stocks, bonds, or options.

Factor Portfolios

Investment portfolios constructed to capture risk factors or sources of returns that are believed to explain the performance of securities.

Expected Return

The weighted average of all possible returns for a given investment, with weights being the probabilities of each outcome.