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      Question

      Which of the following insurance contracts is likely to

      have a significant insurance risk component?
      A Warranty contract Correct Answer Incorrect Answer
      B Reinsurance contract Correct Answer Incorrect Answer
      C Catastrophe bond Correct Answer Incorrect Answer
      D Investment contract Correct Answer Incorrect Answer
      E Lease contract Correct Answer Incorrect Answer

      Solution

      Explanation: Catastrophe bonds are issued by insurance or reinsurance companies to transfer specific catastrophe-related risks to investors. These contracts typically have a significant insurance risk component.

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