Exam (elaborations)
RMIN 4000 Final Exam Questions and Answers.
- Course
- Institution
RMIN 4000 Final Exam Questions and Answers.
[Show more]
Content preview
RMIN 4000 Final Exam Questions and AnswersPeril - (correct answer) -Cause of loss
io io io io io io
Risk - (correct answer) -Uncertainty about chance, timing, or amount of loss
io io io io io io io io io io io
Chance of Loss - (correct answer) -Probability that an event will occur
io io io io io io io io io io io
Objective Risk - (correct answer) -The relative variation of actual loss from expected loss; (Actual-
io io io io io io io io io io io io io io
Expected)/Expected; higher variation means higher risk io io io io io
Law of Large Numbers - (correct answer) -Objective risk varies inversely with the square root of the
io io io io io io io io io io io io io io io io
number of cases
io io io
Subjective Risk - (correct answer) -Uncertainty based on a person's mental condition or state of mind
io io io io io io io io io io io io io io io
Hazard - (correct answer) -A condition that increased the frequency or severity of the loss
io io io io io io io io io io io io io io
Moral Hazard - (correct answer) -Arson
io io io io io
Morale Hazard - (correct answer) -Driving drunk
io io io io io io
Pure risk - (correct answer) -Chance of loss or no loss (no gain)
io io io io io io io io io io io io
Speculative risk - (correct answer) -Chance of loss, no loss, or gain
io io io io io io io io io io io
Particular risk - (correct answer) -Risk that affects only affects individuals as individuals
io io io io io io io io io io io io
Legal hazard - (correct answer) -Large damage awards in litigation
io io io io io io io io io
Fundamental/systematic risk - (correct answer) -Affects a large number of individuals or the entire io io io io io io io io io io io io io
economy
io
Enterprise risk - (correct answer) -All major risks faced by a business
io io io io io io io io io io io
Direct loss (property) - (correct answer) -Financial loss that results from physical damage, destruction,
io io io io io io io io io io io io io
or theft
io io
Indirect loss (property) - (correct answer) -Financial loss arising from loss of USE of property
io io io io io io io io io io io io io io
, Liability risk - (correct answer) -Responsibility for actions that cause injury or property damage to
io io io io io io io io io io io io io io
another (no limit)
io io io
Fortuitous loss - (correct answer) -Unforeseen and unexpected by the insured and occurs as a result of
io io io io io io io io io io io io io io io io
chance
io
Risk Transfer - (correct answer) -Pure risk is transferred from the insured to the insurer, who typically
io io io io io io io io io io io io io io io io
is in a better financial position to pay the loss than the insured
io io io io io io io io io io io io io
Indemnification - (correct answer) -The injured is restored to his approximate financial position prior to
io io io io io io io io io io io io io io
the occurrence of the loss
io io io io io
Adverse Selection - (correct answer) -The tendency of persons with a higher-than-average chance of
io io io io io io io io io io io io io
loss to seek insurance at standard (average) rates, which if not controlled by underwriting, results in
io io io io io io io io io io io io io io io io
higher-than-expected loss levels
io io io
Viatical settlement - (correct answer) -Benefactor pays AIDS patient to take out life policy
io io io io io io io io io io io io io
Risk Management - (correct answer) -Formal decision-making process to address risk, including the
io io io io io io io io io io io io
potential financial consequences associated with loss exposures
io io io io io io io
Loss exposure - (correct answer) -Any item exposed to loss; any situation in which a loss may occur
io io io io io io io io io io io io io io io io io
Risk Control - (correct answer) -Reduce frequency or severity of losses
io io io io io io io io io io
Risk Management Process (IESI) - (correct answer) -1. Identify potential losses
io io io io io io io io io io io
2. Evaluate potential losses
io io io
3. Select appropriate RM technique
io io io io io
4. Implement and monitor
io io io
Risk Financing - (correct answer) -Techniques that provide for the funding of losses
io io io io io io io io io io io io
Retention - (correct answer) -Firms retain part or all of the losses that can result from a given loss; Ex:
io io io io io io io io io io io io io io io io io io io
Expense, set aside liquid, credit line
io io io io io io
Retention level - (correct answer) -The dollar amount of losses the firm will retain
io io io io io io io io io io io io io
Captive - (correct answer) -Insurer owned by a parent firm for the purpose of insuring the parent firm's
io io io io io io io io io io io io io io io io io
loss exposure; have easier access to a reinsurer; source of profit
io io io io io io io io io io io
Self-Insurance (self-funding) - (correct answer) -Form of retention; PArt or all of a given loss exposure
io io io io io io io io io io io io io io io
retained by firm; used for workers comp and health plans
io io io io io io io io io io
Risk Retention Group - (correct answer) -A group captive that can write any type of liability coverage
io io io io io io io io io io io io io io io io
except employer liability, workers comp, and personal lines
io io io io io io io io
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 Wisdoms. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
85169 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now