An Efficient Market for Risk, Such as an Insurance Market

Multiple Choice

An efficient market for risk, such as an insurance market, is most likely to exist:

A) when there is a level playing field, so that all participants have approximately the same wealth and the same degree of risk aversion.
B) when the sellers of insurance are risk-averse but the purchasers are not.
C) when there are significant differences between individuals' wealth levels and attitudes toward risk.
D) in the presence of private, or asymmetric, information.