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ERM Exam 4 Ch 9 Questions & Answers 2024/2025
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ERM Exam 4 Ch 9 Questions & Answers 2024/2025 Which one of the following statements is true regarding event tree analysis? Select one: A. Event tree analysis can be used to select the most effective strategy to achieve a goal. B. Event tree analysis provides only quantitative information. ...

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  • August 12, 2024
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  • 2024/2025
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  • erm exam 4 ch 9 questions answers

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ERM Exam 4 Ch 9 Questions & Answers
2024/2025

Which one of the following statements is true regarding event tree analysis?

Select one:

A. Event tree analysis can be used to select the most effective strategy to achieve a goal.

B. Event tree analysis provides only quantitative information.

C. Event tree analysis provides only qualitative information.

D. Event tree analysis typically provides only two options, success or failure. - ANSWERSD. Event tree
analysis typically provides only two options, success or failure.



Which one of the following statements regarding probability is correct?

Select one:

A. The probability of an event that is absolutely certain is 0.

B. The accuracy of theoretical probabilities depends on the size and representative nature of the samples
being studied.

C. Risk management professionals use theoretical probabilities because they are generally available for
and applicable to claim analysis

D. Probabilities associated with events such as coin tosses can be developed from theoretical
considerations and are unchanging. - ANSWERSD. Probabilities associated with events such as coin
tosses can be developed from theoretical considerations and are unchanging.



Regression analysis assumes that

Select one:

A. For any given past year, the projected trend value will be the same as the actual outcome.

B. The linear regression line is more accurate the further it gets from the actual data values used.

C. The variable being forecast varies predictably with another variable.

D. Dependent variables are unaffected by independent variables. - ANSWERSC. The variable being
forecast varies predictably with another variable.

, Magruder Company would like to estimate the number of workers compensation claims to expect next
year. Magruder's risk manager ran a regression analysis in which the number of workers compensation
claims was the dependent variable and the number of payroll hours worked (in thousands) was the
independent variable. The y-intercept from the regression was 3.8. The slope coefficient was 1.4. The
risk manager believes that next year Magruder workers will work 80,000 payroll hours. Based on this
information, approximately how many workers compensation claims should the risk manager expect
next year?

Select one:

A. 15

B. 116

C. 305

D. 1,124 - ANSWERSB. 116



If 95.44% of all outcomes are within two standard deviations above and below the mean and 2.15% of all
outcomes are between two and three standard deviations above and 2.15% of all outcomes are between
two and three standard below the mean, the percentage of all outcomes that lie beyond three standard
deviations from (above and below) the mean is

Select one:

A. .13.

B. .26.

C. 2.15.

D. 4.30. - ANSWERSB. .26.



Decision tree analysis and event tree analysis are similar in a number of ways, but differ in their

Select one:

A. Purpose.

B. Process.

C. Appearance.

D. Approach. - ANSWERSA. Purpose.



A coefficient of variation is derived by

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