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RMIN 4000 Exam 1 Brown Questions and Answers.
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RMIN 4000 Exam 1 Brown Questions and Answers.
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RMIN 4000 Exam 1 Brown Questions andAnswers
Textbook definition of RISK - (correct answer) -Uncertainty concerning the occurrence of a loss
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Better definition of RISK - (correct answer) -A calculated possibility of a negative outcome
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Calculated Possibility - (correct answer) -0 = Impossible event (NO RISK)
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0.5 = Highest Risk (Most Uncertainty)
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1 = 100% Certain Event (NO RISK
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Negative Outcome - (correct answer) -Loss
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Losses must be __________? - (correct answer) -Quantifiable
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Pure Risk States - (correct answer) -Loss
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or
No Loss
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Examples of Pure Risks - (correct answer) -Fire, Cancer, Dog bites a visitor
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Speculative Risk States - (correct answer) -Loss
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No Loss/No Gain
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, Gain
Examples of speculative risks - (correct answer) -Investment, Gambling, Drinking
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Frequency answers what question? - (correct answer) -How often does a loss occur
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The number of losses that occur in a specified time period
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Probability of a loss - (correct answer) -Frequency io io io io io io io
Severity answers what question? - (correct answer) -How much does it cost when a loss does occur?
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The dollar amount for a loss of a specific peril
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Peril - (correct answer) -Cause of a loss
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Hazard - (correct answer) -Condition that creates or increases the frequency and/or severity of a loss
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DOES NOT CAUSE A LOSS io io io io
Examples of Peril - (correct answer) -Fire, Tornado, Collision, Burglary
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Types of Hazard - (correct answer) -Physical
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Moral
Morale (Attitudinal) io
Legal
Physical Hazard - (correct answer) -A physical condition that increases the frequency and/or severity of
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a loss
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Book Definition of Moral Hazard - (correct answer) -Dishonesty or character defects in an individual
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that increase the frequency and/or severity of a loss
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Better Definition of Moral Hazard - (correct answer) -The presence of insurance changes the behavior
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of the insured
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Examples of Moral Hazard - (correct answer) -Using a hammer to create "hail" damage to a roof
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Exaggerating the value of insured property io io io io io
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