A friend tells you about a plan for the formation of an insurance company that will issue insurance policies to protect a person who buys stock against a decline in the value of that stock. Explain why you believe the scheme will or will not work.

Q: For automobile insurance, Describe how risk can be managed. Evaluate the risks in society.…

A: Automobile insurance is a type of insurance that provides financial protection for damages or…

Q: Why are more funds from property and casualty insurance companies than funds from life insurance…

A: Insurance is sharing the risk of the insured which may occur in the future due to some uncertain…

Q: Is disaster insurance unfair to insurance companies ? Explain your answer and provide an example.

A: Disaster Insurance The meaning of disaster insurance is is different from the life insurance which…

Q: Describe a private insurance. what is it? Discuss the primary strengths and advantages, and…

A: Private Insurance means an insurance plan which is not operated by the government. It comes under…

Q: What is a common example of paying for risk transfer in everyday life? Purchasing a house Buying…

A: Risk is an important concept in finance. We face risks in all aspects of our life and more so in the…

Q: Which factor is NOT considered when determining the suitability of investments for a client

A: To determine the investment suitability of a client, we need to determine the client's ability and…

Q: What is a scheme that guarantees returns to investors but uses funds from new investors to pay…

A: Characteristic of a scheme has been provided. We have to find the appropriate scheme.

Q: Warren Buffet, a novel financial expert has provided different investment principles and theories.…

A: The process of allocating resources, usually money, in the anticipation of profit or revenue is…

Q: Why would a life insurance company be concernedabout the financial stability of major corporations…

A: SOLUTION:- A life insurance company source of funds comes from premium it collects from policies…

Q: y that you may consider as an investment opportunity for your client. Your investment should align…

A: Answers1I will be providing TESLA as a stock investmentin next few years because this is stock can…

Q: We have probably all heard about the Bernard Madoff Scandal. As investors we need to have adequate…

A: Financial literacy refers to the knowledge and skills needed to make informed and effective…

Q: In his best seller Wealth Without Risk, Charles J. Givens, the self-styled expert on “low-risk ways…

A: The book – Wealth Without Risks – contains many advices and strategies that an individual can adapt…

Q: How does the Insurance Commission assure the investing public on the safety of the Insurance…

A: Insurance Commission is an amount paid to the broker or agent of insurance products for selling the…

Q: One example of moral hazard in finance industry is "insurance policies often decreases incentive to…

A: When one party to a contract participates in reckless action knowing that the other party will pay…

Q: e investment banker does all of the following except a. make long-term investments for banking…

A: Investment bankers are finance expert who work in raising money for business and help business in…

Q: Placing the insured in the same position financially as he or she or it was in immediately before…

A: The insurance companies are the form of financial institutions who provide coverage amount to the…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.