Question 1

Carelessness or indifference to a loss is an example of

Accepted Answer

A) physical hazard. 
B) objective probability. 
C) moral hazard. 
D) attitudinal hazard. 
A) physical hazard. 
B) objective probability. 
C) moral hazard. 
D) attitudinal hazard.

Question 2

All of the following are programs to insure fundamental risks EXCEPT

Accepted Answer

A) federally subsidized flood insurance. 
B) auto physical damage insurance. 
C) Social Security. 
D) unemployment insurance. 
A) federally subsidized flood insurance. 
B) auto physical damage insurance. 
C) Social Security. 
D) unemployment insurance.

Question 3

All of the following are examples of personal risks EXCEPT

Accepted Answer

A) poor health. 
B) unemployment. 
C) premature death. 
D) flood. 
A) poor health. 
B) unemployment. 
C) premature death. 
D) flood.

Question 4

All of the following are considered financial risks EXCEPT

Accepted Answer

A) the decline in the value of a bond portfolio because of rising interest rates. 
B) increased cost of production because of rising commodity prices. 
C) loss of money because of adverse movements in currency exchange rates. 
D) destruction of a production facility caused by an explosion. 
A) the decline in the value of a bond portfolio because of rising interest rates. 
B) increased cost of production because of rising commodity prices. 
C) loss of money because of adverse movements in currency exchange rates. 
D) destruction of a production facility caused by an explosion.

Question 5

A peril is

Accepted Answer

A) a moral hazard. 
B) the cause of a loss. 
C) a condition which increases the chance of a loss. 
D) the probability that a loss will occur. 
A) a moral hazard. 
B) the cause of a loss. 
C) a condition which increases the chance of a loss. 
D) the probability that a loss will occur.

Question 6

All of the following are examples of direct property losses EXCEPT

Accepted Answer

A) the theft of a person's jewelry. 
B) the destruction of a firm's manufacturing plant by an earthquake. 
C) the cost of renting a substitute vehicle while a collision-damaged car is being repaired. 
D) the vandalism of a person's automobile. 
A) the theft of a person's jewelry. 
B) the destruction of a firm's manufacturing plant by an earthquake. 
C) the cost of renting a substitute vehicle while a collision-damaged car is being repaired. 
D) the vandalism of a person's automobile.

Question 7

Tyndal Products Company produces cereal.The company has entered into contracts to deliver 500,000 boxes of cereal during the next 18 months.The company is concerned that the prices of two ingredients,corn and wheat,may increase over the next 18 months.The company used grain futures contracts to hedge the price risk associated with these commodities.Tyndal's use of hedging illustrates which risk management technique?

Accepted Answer

A) noninsurance transfer 
B) risk avoidance 
C) risk retention 
D) risk assumption 
A) noninsurance transfer 
B) risk avoidance 
C) risk retention 
D) risk assumption

Question 8

A pure risk is defined as a situation in which there is

Accepted Answer

A) only the possibility of loss or no loss. 
B) only the possibility of profit. 
C) a possibility of neither profit nor loss. 
D) a possibility of either profit or loss. 
A) only the possibility of loss or no loss. 
B) only the possibility of profit. 
C) a possibility of neither profit nor loss. 
D) a possibility of either profit or loss.

Question 9

An insurance company estimates its objective risk for 10,000 exposures to be 10 percent.Assuming the probability of loss remains the same,what would happen to the objective risk if the number of exposures were to increase to 1 million?

Accepted Answer

A) It would decrease to 1 percent. 
B) It would decrease to 5 percent. 
C) It would remain the same. 
D) It would increase to 20 percent. 
A) It would decrease to 1 percent. 
B) It would decrease to 5 percent. 
C) It would remain the same. 
D) It would increase to 20 percent.

Question 10

Cathy's car hit a patch of ice on the road.The car skidded off the road and hit a tree.The presence of ice on the road is best described as a(n)

Accepted Answer

A) peril. 
B) subjective risk. 
C) physical hazard. 
D) indirect loss. 
A) peril. 
B) subjective risk. 
C) physical hazard. 
D) indirect loss.

Question 11

All of the following are burdens to society because of the presence of risk EXCEPT

Accepted Answer

A) The size of an emergency fund must be increased. 
B) Individuals may profit from accepting a speculative risk. 
C) Society is deprived of certain goods and services. 
D) Mental fear and worry are present. 
A) The size of an emergency fund must be increased. 
B) Individuals may profit from accepting a speculative risk. 
C) Society is deprived of certain goods and services. 
D) Mental fear and worry are present.

Carelessness or indifference to a loss is an example of

All of the following are programs to insure fundamental risks EXCEPT

All of the following are examples of personal risks EXCEPT

All of the following are considered financial risks EXCEPT

A peril is

All of the following are examples of direct property losses EXCEPT

A pure risk is defined as a situation in which there is

An insurance company estimates its objective risk for 10,000 exposures to be 10 percent.Assuming the probability of loss remains the same,what would happen to the objective risk if the number of exposures were to increase to 1 million?

Cathy's car hit a patch of ice on the road.The car skidded off the road and hit a tree.The presence of ice on the road is best described as a(n)

All of the following are burdens to society because of the presence of risk EXCEPT

Insurance and Risk

Introduction to Risk Management

Advanced Topics in Risk Management

Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Homeowners Insurance,section I

Homeowners Insurance,section Ii

Auto Insurance

Auto Insurance and Society

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

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Exam 1: Risk in Our Society

Carelessness or indifference to a loss is an example of

All of the following are programs to insure fundamental risks EXCEPT

All of the following are examples of personal risks EXCEPT

All of the following are considered financial risks EXCEPT

A peril is

All of the following are examples of direct property losses EXCEPT

A pure risk is defined as a situation in which there is

An insurance company estimates its objective risk for 10,000 exposures to be 10 percent.Assuming the probability of loss remains the same,what would happen to the objective risk if the number of exposures were to increase to 1 million?

Cathy's car hit a patch of ice on the road.The car skidded off the road and hit a tree.The presence of ice on the road is best described as a(n)

All of the following are burdens to society because of the presence of risk EXCEPT

Insurance and Risk

Introduction to Risk Management

Advanced Topics in Risk Management

Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Homeowners Insurance,section I

Homeowners Insurance,section Ii

Auto Insurance

Auto Insurance and Society

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

Filters