It is better to pool risks because :
A) you can increase your income.
B) you can reduce your expected income but increase its standard deviation.
C) you can reduce the variability of expected income.
D) you can increase your expected income.

Question

Quizplus · Accepted Answer

Pooling risks allows for a reduction in the variability of expected income. By spreading risk across a larger group, the impact of any individual loss or unexpected event can be minimized. While pooling may not necessarily increase expected income, it can provide a more stable and predictable financial outcome.

It Is Better to Pool Risks Because