RMI 211 Mock Test Questions With Correct
Answers
1) A family's automobile that is a total loss as a result of a collision is an example of which of the
following types of risk?
I. Speculative risk
II. Diversifiable risk
A) I only
B) II only
C) both I and II
D) neither I nor II - answerB
2...
1) A family's automobile that is a total loss as a result of a collision is an example of which of the
following types of risk?
I. Speculative risk
II. Diversifiable risk
A) I only
B) II only
C) both I and II
D) neither I nor II - answer✔✔B
2) All of the following are programs to insure nondiversifiable risks EXCEPT
A) federal flood insurance.
B) auto physical damage insurance.
C) Social Security.
D) unemployment insurance. - answer✔✔B
3) Which of the following statements about chance of loss and risk is (are) true?
I. If the chance of loss is identical for two groups, the objective risk must be the same.
II. Two individuals may perceive differently the risk inherent in a given activity.
A) I only
B) II only
C) both I and II
D) neither I nor II - answer✔✔B
4) A risk that affects only individuals or small groups and not the entire economy is called a
A) diversifiable risk.
B) pure risk.
C) speculative risk.
D) nondiversifiable risk. - answer✔✔A
5) Objective risk is defined as
A) the probability of loss.
B) the relative variation of actual loss from expected loss.
C) uncertainty based on a person's mental condition or state of mind.
D) the cause of loss. - answer✔✔B
6) 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?
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. - answer✔✔A
7) Which of the following statements is true regarding careers in risk management and insurance
going forward?
A) Employment opportunities in insurance will be limited to sales and claims.
B) Reduced consumer demand for insurance products will create significant job losses in the
industry.
C) Many job opportunities will be available requiring a wide range of knowledge and skills.
D) A government takeover of the insurance industry is predicted, reducing the number of private
sector jobs. - answer✔✔C
8) Janice mistakenly thought that Medicare covers the cost of a long-term care in a nursing
home. So she did not purchase long-term care insurance or save in case she needed a long stay in
a nursing home. Janice's treatment of the risk of a long-term stay in a nursing home is best
described as
A) planned retention.
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