Which of the Following Is a Consequence of Transferring Risk

question 125

Multiple Choice

Which of the following is a consequence of transferring risk to an insurance company?

• A) An increase in stock value because risk has been reduced.
• B) A guaranteed small loss in exchange for protection against large losses.
• C) Higher rates of return because the firm is now free to pursue high-risk projects.
• D) Protection against losses at no significant cost to the firm.

---

Definitions:

Necessity

An essential requirement or need for survival or to maintain a certain standard of living.

Luxury

Goods or services that are considered non-essential but desired for their quality, status, or comfort they provide.

Substitutes

Products or services that can replace or be used in place of another, offering consumers alternative choices.

Demand for Gasoline

The consumer's desire and ability to purchase gasoline at various price points.