________ bonds represent a novel way of obtaining insurance from capital markets against specified disasters.

Question

Quizplus · Accepted Answer

Catastrophe bonds are designed to transfer the risk of natural disasters or other catastrophic events from the issuer to investors in the capital markets. In exchange for investing in the bond, investors receive high yields, but they also risk losing some or all of their principal if the specified catastrophe occurs. Catastrophe bonds are a form of insurance-linked securities and represent a innovative way of obtaining insurance from capital markets.

________ Bonds Represent a Novel Way of Obtaining Insurance from Capital