Why might a large, multinational company choose to insure against common events, such as vehicle accidents, but

Question:

Why might a large, multinational company choose to insure against common events, such as vehicle accidents, but not against rare events which could cause large losses? Explain briefly.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

See More Books

Question Posted: Jun 09, 2011 06:16 AM

See More Questions

Why might a large country like the United States have a greater incentive than a small country to use trade restrictions?
Why might a large corporation want to raise long- term capital through a private placement rather than a public offering?
You are the CEO of a large multinational company that has become highly profitable by investing in a Latin American country. As a catalyst in mobilizing the nation's low-cost labor force, your...
Khairul has been working with Tun Hamid Energy Bhd since 1 February 2009 as a Human Resource Executive. Beginning 1 January 2014, he was promoted as Human Resource Manager. Details of his...
If air resistance can be ignored, how does the acceleration of a ball that has been tossed straight upward compare with its acceleration if simply dropped?
The comparative accounts payable and long-term debt balances for a company follow. Based on this information, what is the amount and percentage of increase or decrease that would be shown on a...
Michael Lee is sitting in the lobby of Columbia Area Painting waiting to meet with the owner, Paul Ferguson. Michael is a salesperson for Bright Colors Paints. Hes here to speak with Paul because...
Sunlight is used in a double-slit interference experiment. The fourth-order maximum for a wavelength of 450 nm occurs at an angle of = 90o. Thus, it is on the verge of being eliminated from the...
Why are financial markets essential for a healthy economy and economic growth? What are financial institutions? Describe each and give an example of who may use them: Investment banks Commercial...
Q1. Use the LIFO cost-flow assumption to answer the following questions. YEAR 1: Purchase #1 1,000 units @ $1 = $1,000 Purchase #2 1,000 units @ $1 = $1,000 a. How much is goods available for sale?...
The overall gain from leasing is the sum of the leases value to the lessee and its value to the lessor. Construct simple numerical examples showing how this gain is affected by a. The rate of...
Large businesses spend millions of dollars annually on insurance. Why? Should they insure against all risks or does insurance make more sense for some risks than others?
On June 1, 2014, Jill Bow and Aisha Amri formed a partnership, contributing $280,000 cash and $360,000 of equipment, respectively. Also, the partnership assumed responsibility for a $40,000 note...
Nonverbal communication is defined more broadly than we often realize. Were there any examples of nonverbal communication (art, use of time, space, silence, touch, etc.) that surprised you? 2. Give...
Analogic change refers to a tendency to generalize the rules of language, a major cause of language change. We mentioned two instances, the general- ization of the plural rule (cow/kine becoming...
Find the angle between two equal forces of magnitude P, when their resultant is 1.5P. What will be the maximum value of resultant?
According to Mark Adams in "The Coffee Junkie's Guide to Caffeine Addiction" New York Times: Does caffeine actually make the user more awake/alert? Why or why not? What are the consequences of daily...
The monthly water withdrawals from an aquifer and monthly water demand during 3 years are presented in Table 11. 12. Calculate the reliability, resiliency, and vulnerability of this aquifer of water...
The MIT Sloan School of Management is one of the leading business schools in the U.S. The following table contains the tuition data for the masters program in the Sloan School of Management. a. Use...
Gouta condition that results in joint swelling and painis caused by the formation of sodium urate (NaC 5 H 3 N 4 O 3 ) crystals within tendons, cartilage, and ligaments. Sodium urate precipitates out...
Assume you hold a well-balanced portfolio of common stocks. Under what conditions might you want to use a stock-index (or ETF) option to hedge the portfolio? a. Briefly explain how such options could...
P. F. Chang holds a well-diversified portfolio of high-quality, large-cap stocks. The current value of Changs portfolio is $735,000, but he is concerned that the market is heading for a big fall...
Angelo Martino just purchased 500 shares of AT&E at $61.50, and he has decided to write covered calls against these stocks. Accordingly, he sells five AT&E calls at their current market price of...
Using two-way Set-Associative mapping method, design two-way mapping for cache memory from main memory. Explain why you need each condition and show all intermediate calculation procedures. You must...
18) Under the proration approach, the sum of the amounts shown in the subsidiary ledgers will not match the amounts shown in the general ledger because no adjustments from budgeted to actual...
Simpson Auto Body Repair purchased $20,000 of Machinery. The company paid $8,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in four monthly...

Why might a large, multinational company choose to insure against common events, such as vehicle accidents, but

Question:

Step by Step Answer:

Insurance companies have the experience to assess routine risks and to advise com...View the full answer

Principles of Corporate Finance

Students also viewed these Corporate Finance questions