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Chapter-12 1. Diversifiable Risk. In light of what youve learned about market versus diversifiable (specific) risks, explain why an insurance company has no problem in
Chapter-12
1. Diversifiable Risk. In light of what youve learned about market versus diversifiable (specific)
risks, explain why an insurance company has no problem in selling life insurance to individuals
but is reluctant to issue policies insuring against flood damage to residents of coastal areas.
Why dont the insurance companies simply charge coastal residents a premium that reflects the
actuarial probability of damage from hurricanes and other storms? (LO12-1)
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