Question 6 Q: 6 Which of the following statements is true: Options A: Both total expected losses and total unexpected losses are less than the sum of expected and unexpected losses on underlying exposures respectively B: Total expected losses are equal to the sum of individual underlying exposures while total unexpected losses are greater than the sum of unexpected losses on underlying exposures C: Total expected losses are equal to the sum of expected losses in the individual underlying exposures while total unexpected losses are less than the sum of unexpected losses on underlying exposures D: Total expected losses are greater than the sum of individual underlying exposures while total unexpected losses are less than the sum of unexpected losses on underlying exposures Save Question Show Answer Discussion 0 Clear Discussion Most voted Newest No comments yet. Be the first to comment. Post Be respectful. No spam. Correct Answer: C Explanation Total expected losses which are average and anticipated are equal to the sum of expected losses inthe underlying exposures. Total unexpected losses, which are the excess of worst case losses at acertain confidence level over the expected losses, benefit from the diversification effect and arelower than the sum of unexpected losses of the underlying exposures. Therefore Choice 'c' is thecorrect answer. The other choices are incorrect.