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Fynjy0 [20]
3 years ago
11

LMN Insurance Company is concerned about its exposure to hurricane losses for property risks it insured on the Gulf Coast. LMN b

orrowed money from investors by issuing financial securities. LMN promised to repay the money it borrowed with interest if hurricane losses do not exceed a specified level.
If hurricane losses exceed the specified level, LMN will repay less than it borrowed and use the extra money to fund hurricane losses.
The securities that LMN issued are:

a) Futures contracts.
b) Weather options.
c) Catastrophe bonds.
d) Call options.
Business
1 answer:
ELEN [110]3 years ago
3 0

Answer:

c) Catastrophe Bonds

Explanation:

These type of bonds are also known as the CAT bonds, and they are issued  at any catastrophic event which is foreseen in the future. Basically these are insured linked securities that are used in the process of managing risks that are associated with the catastrophic events such as mentioned in the question i.e hurricane.

Any investor before investing in these bonds should fully understand what type of bonds are these because they posses a greater risk of low return and are very different from conventional bonds.

Hope this helps.

Thanks buddy.

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The total cost accumulated in the sales department using the reciprocal method is (calculate all ratios and percentages to 4 dec
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Acturial Cost allocated 24,000

Premium Ratings allocated cost 24,000

Acturial Cost allocated 6400

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Acturial Cost allocated 640

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Acturial Cost allocated 64

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