Test Bank: Chapter 24 Weather, Energy, and Insurance Derivatives On a certain day the highest temperature was 77˚F and the lowest temperature was 61˚F (i) What was the CDD for the day _ (ii) What was the HDD for the day _ Name two refined products of oil on which futures trade _ _ _ _ _ _ _ and (a) (b) (c) Which of the following typically has the highest volatility (Circle one) Crude oil Natural gas Electricity Which of the following typically has the lowest volatility (Circle one) (a) Crude oil (b) Natural gas (c) Electricity (a) (b) (c) (d) A typical reinsurance contract (Circle one) Covers a percentage of all losses by an insurance company Covers all losses of the insurance company up to a certain amount Covers all losses of the insurance company above a certain amount Covers all losses of the insurance company between two amounts (a) (b) (c) (d) For an equity investor, a CAT bond has (Circle one) A great deal of systematic risk Very little systematic risk A moderate amount of systematic risk Negative systematic risk (a) (b) (c) (d) Weather derivatives are frequently used to (Circle one) Hedge the volume of electricity that will be demanded by customers in the summer Hedge the price of oil that must be purchased in the winter Hedge the price of electricity that must be purchased in the summer Hedge the price and volume of gas that must be purchased for heating in the winter A 5×8 contract provides electricity (circle one) (a) From 11pm to 7am on five successive days (b) From 8am to 4pm on five successive days (c) For any hours of a day on successive days (d) For any hours of a day in five successive days ...(d) For any hours of a day in five successive days