Economics · Financial Markets
Consider the following statements regarding Catastrophe Bonds (Cat Bonds): I. Cat bonds allow hazard risk to be transferred from sovereign states to global financial markets by converting risk into tradable securities. II. The principal invested in a cat bond is always returned to the investor, regardless of whether the disaster occurs. III. One key advantage of cat bonds is that their risk curve is uncorrelated with conventional financial risk curves, making them attractive for portfolio diversification. Which of the statements given above is/are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1I, II and III
- 2II and III only
- 3I and III only✓
- 4I and II only
Correct answer
I and III only
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