Which of the following statements concerning the securitization of risk is (are)true?
I.Securitization increases the capacity of the insurance industry.
II.Securitization can be used to protect against catastrophic loss.
A)I only
B)II only
C)both I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

Both statements are true. Securitization allows insurance companies to transfer risk to capital markets, thereby increasing their capacity to underwrite policies. It can also provide a means for protecting against catastrophic loss by pooling risks from multiple insurers and investors into a single security, providing diversification and liquidity.

Which of the Following Statements Concerning the Securitization of Risk