All major airlines are faced with the issue of highly volatile oil price as jet fuel...
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All major airlines are faced with the issue of highly volatile oil price as jet fuel is the second largest expense in the airline industry. In order to better manage its operating costs, for example, Southwest Airline has engaged in long-term contracts to stabilize its fuel price. (1.5 points) Consider the risk described in this event and answer the following by filling in the blank next to each question. 1. Is the risk pure or speculative risk? (Choose ONE) 2. Is the risk diversifiable or non-diversifiable risk? (Choose ONE) 3. Which ERM risk category does the risk belongs to? (Choose ONE) All major airlines are faced with the issue of highly volatile oil price as jet fuel is the second largest expense in the airline industry. In order to better manage its operating costs, for example, Southwest Airline has engaged in long-term contracts to stabilize its fuel price. (1.5 points) Consider the risk described in this event and answer the following by filling in the blank next to each question. 1. Is the risk pure or speculative risk? (Choose ONE) 2. Is the risk diversifiable or non-diversifiable risk? (Choose ONE) 3. Which ERM risk category does the risk belongs to? (Choose ONE)
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Answer rating: 100% (QA)
1 Pure Risk This is a pure risk because it arises from external events beyond the airlines contr... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1118300855
10th Canadian Edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
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