FIN 428 Week 2 Quiz

0 items
FIN 428 Week 2 Quiz
FIN 428 Week 2 Quiz
$7.00
  • Description

FIN 428 Week 2 Quiz

 

  • Correct answerquestion1

​Although insurance may be defined in various ways, the two fundamental characteristics of the insurance mechanism are

​premiums and policies.

​combination and sharing.

​loss prevention and transfer.

​transfer and sharing.

 

 

  • Correct answerquestion2

​The term hazard refers to

​the same thing as the term peril.

​a condition that increases the chance of loss.

​the same thing as probability of loss.

​uncertainty regarding loss.

  • Correct answerquestion3

​From the viewpoint of society and the economy, the most desirable means of dealing with risk is

​loss prevention.

​transfer.

​sharing.

​retention.

  • Correct answerquestion4

​Adverse selection is a term used to describe

​the tendency of the poorer than average risks to seek insurance to a greater extent than do the better than average risks.

​an underwriting error on the part of an insurance company.

​the choice of the wrong insurance to fit a specific need.

​a loss situation in which the chance of loss cannot be determined.

  • Correct answerquestion5

​Pure risk is characterized by

​a chance of loss or no loss only.

​a chance of loss and a chance of gain.

​a chance of gain and a chance of gain.

​the chance of gain or no loss only.

  • Correct answerquestion6

​The definition of risk suggested in the text views risk as

​subjective uncertainty.

​a state of mind.

​a condition of the real world.

​an opportunity for gain or loss.

  • Correct answerquestion7

​Financial risk management encompasses management of

​credit risk, market risk, and liquidity risk

​pure risk, speculative risk, and strategic risk

​operational risk, strategic risk, and credit risk

​compliance risk, credit risk, and strategic risk

  • Correct answerquestion8

​The distinction between fundamental and particular risks is important because

​particular risk policies only allow for partial coverage, whereas fundamental risk policies allow full coverage.

​whether a risk is fundamental or particular may determine how society will deal with it.

​fundamental risks are a source of gain to society.

​normally only particular risks are insurable.

  • Correct answerquestion9

​The term enterprise risk management refers to

​management of risks for profit-making organizations.

​management of financial risks.

​integrated management of a firm’s pure and speculative risks.

​management of risks related to derivatives and futures.

  • Correct answerquestion10

​From the viewpoint of society and the economy, the most desirable means of dealing with risk is

​sharing.

​transfer.

​loss prevention.

​retention.

  • Correct answerquestion11

​Pure risk is characterized by

​a chance of loss and a chance of gain.

​a chance of loss or no loss only.

​a chance of gain and a chance of gain.

​the chance of gain or no loss only.

  • Correct answerquestion12

​The term hazard refers to

​a condition that increases the chance of loss.

​the same thing as the term peril.

​uncertainty regarding loss.

​the same thing as probability of loss.

  • Correct answerquestion13

​The four elements of an insurable risk

​include the requirement of economic feasibility.

​must be present or the exposure cannot be insured.

​are desirable, but some insurable risks do not possess them.

​require that the probability of loss be known.

  • Correct answerquestion14

​According to the law of large numbers, as the number of exposure units is increased

​the chance or probability of loss increases.

​the accuracy of predictions should be better.

​the chance of loss declines.

​the accuracy of predictions should remain about the same.

  • Correct answerquestion15

​The risk that a firm’s IT systems will fail is an example of

​strategic risk.

​compliance risk.

​credit risk.

​operational risk.

  • Correct answerquestion16

​The possibility of loss resulting from a flood is an example of

​a static fundamental risk.

​a dynamic particular risk.

​a static particular risk.

​a dynamic fundamental risk.

  • Correct answerquestion17

​Risk management contributes to organization profit

​by reducing the organization’s operating effectiveness.

​by reducing organization’s operating costs with staff reductions.

​by allowing the organization to engage in certain speculative risks.

​by reducing the cost of losses.

  • Correct answerquestion18

​The risk that a firm’s IT systems will fail is an example of

​compliance risk.

​operational risk.

​credit risk.

​strategic risk.

  • Correct answerquestion19

​The distinction between fundamental and particular risks is important because

​fundamental risks are a source of gain to society.

​normally only particular risks are insurable.

​particular risk policies only allow for partial coverage, whereas fundamental risk policies allow full coverage.

​whether a risk is fundamental or particular may determine how society will deal with it.

  • Correct answerquestion20

​The possibility of loss resulting from a flood is an example of

​a static fundamental risk.

​a dynamic particular risk.

​a dynamic fundamental risk.

​a static particular risk.

  • Correct answerquestion21

​Risk management contributes to organization profit

​by reducing organization’s operating costs with staff reductions.

​by reducing the cost of losses.

​by allowing the organization to engage in certain speculative risks.

​by reducing the organization’s operating effectiveness.

  • Correct answerquestion22

​There are two basic approaches to the interpretation of probability.  In insurance we are primarily concerned with

​the subjective interpretation.

​the relative frequency interpretation.

​the a priori interpretation.

​the Bayesian interpretation.

  • Correct answerquestion23

​Financial risk management encompasses management of

​operational risk, strategic risk, and credit risk

​pure risk, speculative risk, and strategic risk

​credit risk, market risk, and liquidity risk

​compliance risk, credit risk, and strategic risk

  • Correct answerquestion24

​The four elements of an insurable risk

​are desirable, but some insurable risks do not possess them.

​include the requirement of economic feasibility.

​require that the probability of loss be known.

​must be present or the exposure cannot be insured.

  • Correct answerquestion25

​Although insurance may be defined in various ways, the two fundamental characteristics of the insurance mechanism are

​transfer and sharing.

​premiums and policies.

​combination and sharing.

​loss prevention and transfer.

  • Correct answerquestion26

​The definition of risk suggested in the text views risk as

​subjective uncertainty.

​an opportunity for gain or loss.

​a state of mind.

​a condition of the real world.

  • Correct answerquestion27

​There are two basic approaches to the interpretation of probability.  In insurance we are primarily concerned with

​the relative frequency interpretation.

​the Bayesian interpretation.

​the subjective interpretation.

​the a priori interpretation.

  • Correct answerquestion28

​The term enterprise risk management refers to

​management of risks related to derivatives and futures.

​management of risks for profit-making organizations.

​management of financial risks.

​integrated management of a firm’s pure and speculative risks.

  • Correct answerquestion29

​According to the law of large numbers, as the number of exposure units is increased

​the accuracy of predictions should remain about the same.

​the chance of loss declines.

​the accuracy of predictions should be better.

​the chance or probability of loss increases.

  • Correct answerquestion30

​Adverse selection is a term used to describe

​an underwriting error on the part of an insurance company.

​a loss situation in which the chance of loss cannot be determined.

​the choice of the wrong insurance to fit a specific need.

​the tendency of the poorer than average risks to seek insurance to a greater extent than do the better than average risks.