Ernesto Is Opening a New Car Wash

Multiple Choice

Ernesto is opening a new car wash. The required investment of money and time is sizable and although he has high hopes, Ernesto is taking a speculative risk. What does this mean?

A) His investment involves a chance of profit or loss.
B) His risk can be shifted to an insurance company if he buys product liability insurance.
C) He would be best advised to self-insure his exposure to malpractice liability.
D) His insurance premium would be based on the law of large numbers.