Which of the following activities does NOT diversify risk?
A) writing earthquake insurance policies for the entire Western United States
B) writing hurricane insurance policies only in Florida
C) investing in real estate in various states across the United States.
D) purchasing the stock of a variety of different companies

Question

Quizplus · Accepted Answer

Writing hurricane insurance policies only in Florida does not diversify risk because it concentrates the risk in a single geographic area known for hurricanes, increasing the potential for large-scale losses from a single event. Diversification involves spreading risk across different areas or types of investments to reduce the impact of a single adverse event.

Which of the Following Activities Does NOT Diversify Risk