Question

A corporation sells securities to an investment banking firm on January 1st. The next day an international oil crisis causes stock prices to drop dramatically. The corporation is immune from the drop in price of its stock due to which function of the investment banking​ firm?

Answer 1

Answer:

The correct answer is underwriting.

Explanation:

The insurance involves the transfer of risks that tries to eliminate some of the negative economic consequences of the claims, so that the amount of the damages or losses that a part suffers are distributed among a community of people that jointly supports it, with a much smaller effect than if the damage arises individually. From a mathematical point of view, insurance transforms the risks to which people are subjected to bearable probabilities through an organization.