Topic $1$: choose one from question number $1$ OR $2$

Topic $2$: choose one from question number $3$ OR $4$

Assume that the chance of loss is $3$ percent for two different fleets of trucks. Explain how it is possible that objective risk for both fleets can be different even though the chance of loss is identical. $(50$ points$)$

Rubric: in this question, $25$ points will be given for explanation of how the chance of loss is identical, and $25$ points will be given for explanation of how the objective risk can be different.

Several types of risk are present in the American economy. For each of the following, identify the type of risk that is present. $($nondiversifiable risk; pure risk; speculative risk$)$; Explain your answer. $(50$ points$)$

a$.$ The Department of Homeland Security alerts the nation of a possible attack by terrorists. $(7$ points$)$

Rubric: in this question, $3$ points will be given for what type of risk it is$,$ and $4$ points will be given for explanation of why it is this type of risk.

b$.$ A house may be severely damaged in a fire. $(7$ points$)$

Rubric: in this question, $3$ points will be given for what type of risk it is$,$ and $4$ points will be given for explanation of why it is this type of risk.

c$.$ A family head may be totally disabled in a plant explosion. $(7$ points$)$

Rubric: in this question, $3$ points will be given for what type of risk it is$,$ and $4$ points will be given for explanation of why it is this type of risk.

d$.$ An investor purchases $100$ shares of Microsoft stock. $(7$ points$)$

Rubric: in this question, $3$ points will be given for what type of risk it is$,$ and $4$ points will be given for explanation of why it is this type of risk.

e$.$ A river that periodically overflows may cause substantial property damage to thousands of homes in the floodplain. $(7$ points$)$

Rubric: in this question, $3$ points will be given for what type of risk it is$,$ and $4$ points will be given for explanation of why it is this type of risk.

f$.$ Home buyers may be faced with higher mortgage payments if the Federal Reserve raises interest rates at its next meeting. $(7$ points$)$

Rubric: in this question, $3$ points will be given for what type of risk it is$,$ and $4$ points will be given for explanation of why it is this type of risk.

g$.$ A worker on vacation plays the slot machines in a casino. $(8$ points$)$

Rubric: in this question, $4$ points will be given for what type of risk it is$,$ and $4$ points will be given for explanation of why it is this type of risk.