Question

What is the objective of risk transfer?

a.

Minimize the total cost of capital needed for risk management.

b.

Maximize profits through high-risk investments.

c.

Achieve regulatory compliance in the insurance industry.

d.

Provide comprehensive coverage for all types of risks.

Answer: (a).Minimize the total cost of capital needed for risk management. Explanation:The objective of risk transfer is to enable a customer to minimize the total cost of capital needed to deal with a risk by reinsuring.

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Q. What is the objective of risk transfer?

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