Insurance works best in situations where there is
a. a high probability of a small loss.
b. a low probability of a small loss.
c. a high probability of a large loss.
d. a low probability of a large loss.
e. the level of probability and the size of the loss are irrelevant.
D
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Allocative efficiency occurs
A) anywhere inside or on the production possibilities frontier. B) when the total cost of production is minimized. C) at all points on the production possibilities frontier. D) at only one point on the production possibilities frontier. E) at the points where the production possibilities frontier crosses the horizontal or vertical axis.
________ is a company that obtains funds primarily from wealthy investors and uses the funds to make complicated, often risky investments
A) A mutual fund B) A pension fund C) A hedge fund D) An investment bank