Post Utme Aaua 2024 Commerce Question 36

Practice objective / multiple choice question 36 from the 2024 Post Utme Aaua Commerce examination.

Post Utme Aaua 2024 Commerce Objective / Multiple Choice
Question 36 POST_UTME_AAUA • 2024 • COMMERCE • objective

The concept of risk management in insurance is closely related to the idea of diversification. Explain how diversification can help reduce risk in an insurance portfolio.

Answer Options

Correct Answer A. Diversification can help reduce risk by spreading investments across different asset classes, reducing exposure to any one particular risk.
B. Diversification can increase risk by concentrating investments in a single asset class, increasing exposure to potential losses.
C. Diversification has no impact on risk in an insurance portfolio.
D. Diversification can only be applied to investment portfolios, not insurance portfolios.
Correct Answer
A
Correct Option:
Diversification can help reduce risk by spreading investments across different asset classes, reducing exposure to any one particular risk.

About This Question

This is Post Utme Aaua 2024 Commerce Question 36. It is one of the objective questions from the 2024 Post Utme Aaua Commerce examination.

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