RMI 2302 EXAM 1
Increase the discount rate - Answer- What effect do political incentives have on the discount rate used to make governmental decisions?
Frequency, severity, expected value, standard deviation - Answer- Which is the best measure of risk?
Speculative - Answer- Own...
RMI 2302 EXAM 1
Increase the discount rate - Answer- What effect do political incentives have on the discount rate used
to make governmental decisions?
Frequency, severity, expected value, standard deviation - Answer- Which is the best measure of risk?
Speculative - Answer- Owning a share of IBM stock is an example of what category of risk?
Financial - Answer- The possibility of an organization losing money on its investments is an example of
which of the following sources of risk?
Decision Theory - Answer- Which of the following is used to determine optimal strategies where a
decision maker is faced with several alternatives and an uncertain or risky pattern of future events?
Ability to issue stock - Answer- Which is an advantage of a corporation?
Frequency - Answer- When measuring risk, likelihood is synonymous with:
Peril - Answer- The immediate cause of a loss is:
Core - Answer- Which of the categories of risk represent the risks that are inherent in organization's
operations:
Personal - Answer- Possible illness and premature death are examples of which of the following
sources of risk:
Moral Hazard - Answer- Cole drives more recklessly because his car has airbags and anti-lock brakes.
Cole's behavior is an example of:
Societal Hazard - Answer- Changes to the law, such as the legalization of marijuana, are examples of:
True - Answer- True or False: A regret table represents the amount of profit foregone by not adopting
the optimal course of action.
Determine objectives, Identify risks, Evaluate risks, Implement the decision - Answer- Steps in the Risk
Management Process:
i, ii, & iii. - Answer- Common pitfalls in decision making include:
i. ignoring implicit costs
ii. failing to ignore sunk costs
iii. failing to understand the marginal-average distinction
Bentham - Answer- John Stuart Mill was a child prodigy and protege of:
Don't risk more than you can afford to lose
Don't risk a lot just to gain a little
Consider the odds - Answer- Rules of Risk Management:
maximum possible loss - Answer- "Worst case scenario"
Risk (loss) financing - Answer- Retention is a method of:
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