Exam (elaborations)
CPCU 500 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
- Course
- Institution
CPCU 500 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
[Show more]
Content preview
CPCU 500 QUESTIONS AND ANSWERSWITH SOLUTIONS 2024
Risk - ANSWER the uncertainty about outcomes, with the possibility that some of the outcomes can be
negative. Quantified by knowing the probability of the possible outcomes
Probability - ANSWER the likelihood that an outcome or event will occur. Probabilities are stated as a
decimal figure, a percentage, or a fraction.
What are the 2 elements associated with risk? - ANSWER uncertainty of outcome + possibility of
negative outcome
Pure Risk - ANSWER a chance of loss or no loss, but no chance of gain.
Speculative Risk - ANSWER a chance of gain or loss (investment).
Price Risk - ANSWER the uncertainty over the size of cash flows resulting from possible changes in the
cost of raw materials and other inputs (lumber, gas, or electricity)
Credit Risk - ANSWER the risk that customers and other debtors will fail to make promised payments.
Distinguish Diversifiable vs. Nondiversifiable Risk - ANSWER Diversifiable risks can be managed by
spreading (such as purchasing multiple businesses). Nondiversifiable risks are correlated so that their
gains or losses tend to occur simultaneously rather than randomly.
What are the 4 quadrants of risk? - ANSWER Hazard, Operational, Financial, and Strategic risk
Hazard - ANSWER a condition that increases the frequency or severity of a loss.
What are the classifications of risk? - ANSWER pure vs. speculative. subjective vs. objective. diversifiable
vs. nondiversifiable.
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 Performance. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79223 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now