RMI 211 Mock Test Complete Guide
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? - A) I only (Speculative risk) - B) II only (Diversifiable risk) - C) Both I and II - D) Neither I nor II
Answer: B) II only
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?
- A) I only (Speculative risk)
- B) II only (Diversifiable risk)
- C) Both I and II
- D) Neither I nor II
Answer: B) II only
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) Auto physical damage insurance
3. Which of the following statements about chance of loss and risk is (are) true?
- A) I only
- B) II only
- C) Both I and II
- D) Neither I nor II
Answer: B) II only
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) Diversifiable risk
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) The relative variation of actual loss from expected loss
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: C) It would remain the same
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) Many job opportunities will be available requiring a wide range of knowledge and skills
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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