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Part $1$

How do financial institutions help with$$ risk$-$bearing?

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Part $1$

$($Select all the choices that$$ apply.$)$

A$.$

Insurance companies spread out risk by pooling premiums together from policy holders and pay the claims of those who have an$$ accident, fire, medical need or die. This process spreads the financial risk of these events out across a large pool of policyholders and the investors in the insurance company.

B$.$

Mutual funds and pension funds take your savings and spread them out among the stocks and bonds of many different$$ companies, limiting your exposure to any one company.

C$.$

Investment companies will deny any attempt by an investor to concentrate their investment in one single company as this would violate their role in spreading out risk.

D$.$

Financial institutions not only assist with the$$ risk$-$bearing of savers and$$ investors, but must also be concerned about their own$$ risk, spreading their loans out among a variety of clientele.