8 Risk transfer means:

A.shifting the responsibility of bearing the risk from one party to another.

B.transferring of a pure risk to an entity that pools the risk of loss and provides payment if a loss occurs.

C.transferring of a pure risk to an entity that pools the risk of loss and provides payment if a loss occurs.

D.combining pure risk and objective risk.

9 Insurance companies have to deal with the concept of adverse selection, which is

A.high-risk persons are more likely to purchase insurance

B.the practice of low-risk insured seeking low premiums

C.insureds are likely to increase their risky behaviour

D.insurance salespersonstry tosell their most profitable policies

10 How does the change in interest rate affect the bond price?

A.an increase in interest rate lowers the bond price

B.a decrease in interest rate increases the bond price

C.anincrease in interest rate increases the bond price

D.the net effect is zero

List andbriefly describefive basic roles of the financial system: