For each of the following scenarios, say whether pooling or diversification is a more promising risk-mitigation strategy.
a. Employees of a company who receive their salaries and health insurance from their employer and also invest their savings in that company’s stocks: Diversification or Pooling.
b. Families who are worried about losing their possessions if their houses burn down: Diversification or Pooling.
c. Neighbouring farmers who grow the same crop, which is prone to failure in dry years: Diversification or Pooling.