The Candy Company's Chief Risk Officer has been told of two individual risk scenarios that are concerning.

- A change in regulations that will eliminate 25% of the company's revenue

- An increase in reinsurance costs that will decrease the company's profit margin by 25%

1. Assuming revenues are $100 million prior to the realization of the risk, what would revenues be in millions if both risks were realized at the same time?

A) 100 B) 75 C) 25 D) Cannot be determined

2. Assume that only risk 2 becomes a reality and that the profit margin is 10%. How much profit would the company realize?

A) 10 B) 75 C) 7.5 D) 5.63