RMIN 4000 BROWN EXAM 2 COMPREHENSIVE TEST PAPER QUESTIONS WITH SOLUTIONS

RMIN 4000 BROWN EXAM 2
COMPREHENSIVE TEST PAPER QUESTIONS
WITH SOLUTIONS

●● Better definition of RISK
Answer: A calculated possibility of a negative outcome


●● Calculated Possibility
Answer: 0 = Impossible event (NO RISK)


0.5 = Highest Risk (Most Uncertainty)


1 = 100% Certain Event (NO RISK


●● Negative Outcome
Answer: Loss


●● Losses must be __________?
Answer: Quantifiable


●● Pure Risk States

,Answer: Loss


or


No Loss


●● Examples of Pure Risks
Answer: Fire, Cancer, Dog bites a visitor


●● Speculative Risk States
Answer: Loss


No Loss/No Gain


Gain


●● Examples of speculative risks
Answer: Investment, Gambling, Drinking


●● Frequency answers what question?
Answer: How often does a loss occur

, The number of losses that occur in a specified time period


●● Probability of a loss
Answer: Frequency


●● Severity answers what question?
Answer: How much does it cost when a loss does occur?


The dollar amount for a loss of a specific peril


●● Peril
Answer: Cause of a loss


●● Hazard
Answer: Condition that creates or increases the frequency and/or
severity of a loss


DOES NOT CAUSE A LOSS


●● Examples of Peril
Answer: Fire, Tornado, Collision, Burglary