Weather derivatives based on temperature deviations above average benchmarks make use of specific indexes for average monthly and seasonal temperatures as one example for 15 U.S. and five different European cities, with index values set for instance, by Earth Satellite, the National Climate Data Center with variations based on specific indexes and deviations from a base temperature for cooling degree day and heading degree day indexes.

Question

Quizplus · Accepted Answer

The statement is true. Weather derivatives do indeed make use of specific indexes for average monthly and seasonal temperatures, with index values set by organizations like Earth Satellite and the National Climate Data Center. These indexes account for deviations from a base temperature and can include measures like cooling degree days and heating degree days.

Weather Derivatives Based on Temperature Deviations Above Average Benchmarks Make