Exam (elaborations)
BUSFIN 3300 Exam 1 Questions with Correct Answers
- Course
- Institution
BUSFIN 3300 Exam 1 Questions with Correct Answers
[Show more]
Content preview
BUSFIN 3300 Exam 1 Questions with CorrectAnswers
Traditional definition of risk Correct Answer-uncertainty concerning the
occurrence of a loss
Insurance definition of risk Correct Answer-used to identify the property
or life that is being considered for insurance
uncertainty Correct Answer-used in situations where such probabilities
cannot be estimated
Loss Exposure Correct Answer-any situation or circumstance in which a
loss is possible, regardless of whether a loss occurs
Objective Risk Correct Answer-the relative variation of actual loss from
expected loss
- it can be statistically calculated by some measure of dispersion, such as
the standard deviation
Subjective (perceived) risk Correct Answer-uncertainty based on a
person's mental condition or state of mind
Chance of Loss Correct Answer-the probability that an event that causes
a loss will occur
,Objective Probability Correct Answer-refers to the long-run relative
frequency of an event based on the assumptions of an infinite number of
observations and of no change in the underlying conditions
subjective probability Correct Answer-the individual's personal estimate
of the chance of loss
peril Correct Answer-The cause of a loss (Fire, windstorm, lightning, or
damage to your car because of a collision)
Hazard Correct Answer-A condition that increases the frequency or
severity of a loss.
Physical Hazard Correct Answer-a physical condition that increases the
frequency or severity of loss
Moral Hazard Correct Answer-is dishonesty or character defects in an
individual that increase the frequency or severity of loss
Attitudinal Hazard (Morale Hazard) Correct Answer-carelessness or
indifference to a loss, which increases the frequency or severity of a loss
Legal Hazard Correct Answer-characteristics of the legal system or
regulatory environment that increase the frequency or severity of losses
, Pure Risk Correct Answer-A situation in which there are only the
possibilities of loss or no loss (earthquake)
Speculative Risk Correct Answer-a situation in which either profit or
loss is possible (gambling)
diversifiable risk Correct Answer-A risk that affects only some
individuals, businesses, or small groups (car theft). It can be reduced or
eliminated by diversification
nondiversifiable risk Correct Answer-a risk that affects the entire
economy or large numbers of persons or groups within the economy
(hurricane). It is also called fundamental risk
-government assistance may be necessary to insure nondiversifiable
risks
Enterprise Risk Correct Answer-encompasses all major risks faced by a
business firm, which include: pure risk, speculative risk, strategic risk,
operational risk, and financial risk
Strategic Risk Correct Answer-uncertainty regarding the firm's financial
goals and objectives
Operational Risk Correct Answer-results from the firm's business
operations
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller cracker. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
81298 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now