RMIN 4000 Exam 2 UPDATED ACTUAL Exam Questions and CORRECT Answers
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Course
RMIN 4000
Institution
RMIN 4000
RMIN 4000 Exam 2 UPDATED ACTUAL
Exam Questions and CORRECT Answers
It is possible to buy insurance for each of the following risks. Which one would likely
involve the smallest risk charge?
a) Nuclear disaster
b) A firm's loss of reputation following a lawsuit
c) Cyber attacks against a firm
...
RMIN 4000 Exam 2 UPDATED ACTUAL
Exam Questions and CORRECT Answers
It is possible to buy insurance for each of the following risks. Which one would likely
involve the smallest risk charge?
a) Nuclear disaster
b) A firm's loss of reputation following a lawsuit
c) Cyber attacks against a firm
d) Loss of or damage to an individual's smartphone
e) Theft of a priceless work of art - CORRECT ANSWER✔✔- d) Loss of or damage to an
individual's smartphone
Commercial insurance policies covering cyber risk have a number of "exclusions" - perils or
losses that are not covered under the policy. In many cases, this is because the peril or loss
does not fulfill one of the characteristics of an ideally insurable risk. Which of the following
exclusion is most likely because losses are not DETERMINABLE?
a) Damage to equipment as the result of a cyber attack
b) Business interruption due to a cyber attack
c) A lawsuit brought by customers alleging release of confidential information
d) Cyber extortion or ransom demanded
e) Destruction or theft of data - CORRECT ANSWER✔✔- e) Destruction or theft of data
Standard homeowners policies exclude coverage for losses due to catastrophic nuclear war.
Considering the characteristics of an ideally insurable risk, what is the MOST LIKELY
reason this peril is not covered?
a) Nuclear war is not fortuitous
b) Nuclear war may be catastrophic to the insurer
c) Nuclear war is not determinable
d) The premium to cover nuclear war would not be economically feasible
e) There are not a large number of homogeneous exposure units exposed to losses from
nuclear war - CORRECT ANSWER✔✔- b) Nuclear war may be catastrophic to the insurer
, A loss is __________ if it is easy to observe that a loss has occurred. - CORRECT
ANSWER✔✔- Determinable
Which of the following is (are) TRUE regarding homogeneous risks?
I. Homogeneous risks have the same or similar probability distributions.
II. Perfectly homogeneous risks have no adverse selection.
III. Homogeneous risks have the same or similar expected loss.
a) I only
b) I and II
c) I and III
d) II only
e) I, II, and III - CORRECT ANSWER✔✔- e) I, II, and III
Bill is the CEO of a company that makes ping pong balls. On January 1, 2002, the company
purchases the building where they produced all of their ping pong balls. The selling price of
the building was $6 million and it was estimated to have a useful life of 20 years. On January
1, 2014, the building is destroyed by a tornado. It is estimated that a new building will cost
$10 million to rebuild. What is the ACV of this loss?
a) $3 million
b) $4 million
c) $5 million
d) $6 million
__________ - (__________*__________) - CORRECT ANSWER✔✔- Replacement Cost -
(% used up * Replacement Cost)
,or equivalently,
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