Which of the Following Is a Consequence of Transferring Risk

question 123

Multiple Choice

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

• A)An increase in share 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.

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Definitions:

Self-Determination Theory

The theory that people need to feel at least some degree of autonomy and internal motivation.

Error Management Theory

A theory suggesting that when making decisions under uncertainty, people are biased toward making the less costly error.

Action Identification Theory

A theory suggesting that how individuals identify and think about their actions affects how they perform and experience those actions.

Temporal Discounting

The bias towards valuing rewards received right away more than those in the future.