Is the insurance contract a derivative? Explain. If it is a derivative, then what type of derivative would we classify it as? Explain. 

 

Identify another possible alternative other than the insurance contract that the University could have used to hedge their risk of an over-reliance on Chinese students. Explain how this alternative strategy would work and how it would hedge the risk. Discuss the pros and cons of this approach in comparison to the insurance option. 

Answer rating: 100% (QA)

The insurance contract can be considered a type of derivative Derivatives are financial instruments that derive their value from an underlying asset o... View the full answer