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Consider the following two events: (a) a bank loses $1 billion from an unexpected lawsuit relating to its transactions with a counterparty and (b) an

Consider the following two events:

(a) a bank loses $1 billion from an unexpected lawsuit relating to its transactions with a counterparty and

(b) an insurance company loses $1 billion because of an unexpected hurricane in Texas. Suppose that you have the same investment in shares issued by both the bank and the insurance company.

Which loss are you more concerned about? Why?

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