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How do financial institutions help with risk-bearing? Select all the choices that apply.) A. B. C. D. Insurance companies spread out risk by pooling premiums
How do financial institutions help with risk-bearing? Select all the choices that apply.) A. B. C. D. Insurance companies spread out risk by pooling premiums together from policy holders and pay the claims of those who have an accident, fire, medical need or die. This process spreads the financial risk of these events out across a large pool of policyholders and the investors in the insurance company. Mutual funds and pension funds take your savings and spread them out among the stocks and bonds of many different companies, limiting your exposure to any one company. Investment companies will deny any attempt by an investor to concentrate their investment in one single company as this would violate their role in spreading out risk. Financial institutions not only assist with the risk-bearing of savers and investors, but must also be concerned about their own risk, spreading their loans out among a variety of clientele
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