6. _______ helps to reduce financial risk when unexpected events occur, such as fires, floods, earthquakes, auto accidents, illnesses, and death.
A. Mutual funds
B. Insurance
C. Inventory
D. Taxes
My answer is B.
Yes, B.
Thank you!
You're welcome.
Correct! The answer is B. Insurance.
Insurance helps to reduce financial risk when unexpected events occur, such as fires, floods, earthquakes, auto accidents, illnesses, and death. It provides protection against potential losses by transferring the risk of those losses to an insurance company. In exchange for regular premium payments, the insurance company agrees to compensate you for covered losses as per the terms of your policy.
To arrive at this answer, you can eliminate options A, C, and D as they are not directly related to reducing financial risk due to unexpected events.
A. Mutual funds: Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. While they may help grow wealth over time, they do not provide direct protection against unexpected events.
C. Inventory: Inventory refers to the goods and materials that a business holds for production or sale. It is not directly related to reducing financial risk from unforeseen events.
D. Taxes: Taxes are a mandatory contribution levied by the government on individuals and businesses. While managing taxes is an important aspect of financial planning, it does not directly reduce financial risk from unexpected events.
Therefore, the correct answer is B. Insurance.