Final answer:
True, fixed-price contracts transfer risk from an owner to a contractor, ensuring a set payment regardless of actual costs, similar to how service contracts and hedging serve as guarantees and protection against product failures and currency fluctuations.
Step-by-step explanation:
Option 1: True. Fixed-price contracts are indeed an example of transferring risk from an owner to a contractor. In such a contract, the contractor agrees to provide specified services or deliverables for a pre-determined price, regardless of the costs incurred during the project. This stands in contrast to cost-plus contracts, where the owner bears the risk of cost overruns.
Furthermore, with fixed-price contracts, adjustments for variables such as inflation are commonly set at the outset to provide certainty to both parties. Whereas with service contracts or warranties, the risk of product failure is transferred to the seller, providing a form of guarantee to the buyer.
Additionally, hedging is another form of risk transfer often used in the context of business and finance, where a firm might use a financial instrument to protect itself against potential losses due to exchange rate fluctuations, as explained in the descriptions about firms entering contracts in foreign currencies.