1
ARM 402 EXAM STUDYGUIDE QUESTIONS WITH 100% CORRECT
VERIFIED ANSWERS LATEST UPDATE 2026/27 ASSURED PASS
Maxwell Company has just invested a large sum in new, highly-
sophisticated computer equipment and building renovations.
Maxwell arranged to lease identical equipment at another location
so that it could use the equipment in the event of a disaster at its
location. Maxwell's lease of identical equipment at another location
is an example of
A. Duplication.
B. Separation.
C. Loss reduction.
D. Diversification.
Duplication
Olivia is planning a meeting to explain a new cyber security
procedure. She expects that the meeting will be impeded by hidden
agendas. Which one of the following is the best way for Olivia to deal
with potential hidden agendas?
A. Olivia should refuse to take questions during her meeting, and
request that any questions be forwarded to her in writing after the
meeting.
B. Olivia should start the meeting by stating that she does not expect
everyone like the new procedure, but they must accept it.
C. Olivia should start the meeting by asking participants to state their
concerns or feeling about the procedure.
,2
Olivia should start the meeting by asking participants to state their
concerns or feeling about the procedure
Which one of the following is a common problem with meetings that
leaders should try to avoid?
A. Trying to stick to an agenda and avoid interruptions
B. Committing to an end time, as well as a start time
C. Having the wrong people attend
D. Stating the objective in writing before the meeting
Having the wrong people attend
Which one of the following statements about correlation and
covariance is true?
A. Covariance is a scaled version of correlation and ranges from -1 to
+1.
B. The correlation between variables ranges from 0 to +1.
C. Covariance measures the extent to which variables move together
or independently.
D. Correlation measures causality.
Covariance measures the extent to which variables move together or
independently.
,3
Once a holistic risk management program is created and put into
effect, which one of the following methods can be used to allow
constant and consistent monitoring of the process?
A. Bow-tie diagram
B. Feedback loop
C. Dashboard reporting
D. SWOT analysis
Feedback loop
A risk control technique that reduces the frequency of a particular
loss is
A. Loss prevention.
B. Loss reduction.
C. Diversification.
D. Duplication.
Loss prevention
Ivanhoe Corporation purchases stock in a bank and in a
pharmaceutical manufacturer. Because these are unrelated
industries, Ivanhoe hope that any losses in one stock will be more
than offset by profits in another. Ivanhoe is using which one of the
following risk management techniques?
A. Risk transfer
B. Duplication
C. Diversification
, 4
D. Separation
Diversification
Pacific Bar and Grill was having a problem with employees slipping
and falling in the kitchen and bar areas. Rather than incur the cost to
replace the floors with a new non-slip surface, the owners decided to
require employees to wear slip-resistant shoes and monitor the
floors for spills on a regular schedule. They are also keeping track of
the number of employee slips and falls and the associated costs, as
well as, the expenses involved with this risk management program.
Which one of the following methods is Pacific Bar and Grill using to
measure the effectiveness of this risk management process?
A. Dashboard reporting
B. Feedback loop
C. Scorecard
D. Bow-tie diagram
Feedback loop
Ed is investment manager of the Nellor Foundation, a charitable
trust. Recently, Ed met with the president of the Foundation. Up
until now, assets have been invested in financial assets. Ed told the
president that after performing a simulation, he would like to add a
high-yielding, higher risk real estate investment to the portfolio.
When the president asked if it would be too risky, Ed replied, "It will
actually increase expected returns while reducing risk." The
purported reduction in risk occurs because
ARM 402 EXAM STUDYGUIDE QUESTIONS WITH 100% CORRECT
VERIFIED ANSWERS LATEST UPDATE 2026/27 ASSURED PASS
Maxwell Company has just invested a large sum in new, highly-
sophisticated computer equipment and building renovations.
Maxwell arranged to lease identical equipment at another location
so that it could use the equipment in the event of a disaster at its
location. Maxwell's lease of identical equipment at another location
is an example of
A. Duplication.
B. Separation.
C. Loss reduction.
D. Diversification.
Duplication
Olivia is planning a meeting to explain a new cyber security
procedure. She expects that the meeting will be impeded by hidden
agendas. Which one of the following is the best way for Olivia to deal
with potential hidden agendas?
A. Olivia should refuse to take questions during her meeting, and
request that any questions be forwarded to her in writing after the
meeting.
B. Olivia should start the meeting by stating that she does not expect
everyone like the new procedure, but they must accept it.
C. Olivia should start the meeting by asking participants to state their
concerns or feeling about the procedure.
,2
Olivia should start the meeting by asking participants to state their
concerns or feeling about the procedure
Which one of the following is a common problem with meetings that
leaders should try to avoid?
A. Trying to stick to an agenda and avoid interruptions
B. Committing to an end time, as well as a start time
C. Having the wrong people attend
D. Stating the objective in writing before the meeting
Having the wrong people attend
Which one of the following statements about correlation and
covariance is true?
A. Covariance is a scaled version of correlation and ranges from -1 to
+1.
B. The correlation between variables ranges from 0 to +1.
C. Covariance measures the extent to which variables move together
or independently.
D. Correlation measures causality.
Covariance measures the extent to which variables move together or
independently.
,3
Once a holistic risk management program is created and put into
effect, which one of the following methods can be used to allow
constant and consistent monitoring of the process?
A. Bow-tie diagram
B. Feedback loop
C. Dashboard reporting
D. SWOT analysis
Feedback loop
A risk control technique that reduces the frequency of a particular
loss is
A. Loss prevention.
B. Loss reduction.
C. Diversification.
D. Duplication.
Loss prevention
Ivanhoe Corporation purchases stock in a bank and in a
pharmaceutical manufacturer. Because these are unrelated
industries, Ivanhoe hope that any losses in one stock will be more
than offset by profits in another. Ivanhoe is using which one of the
following risk management techniques?
A. Risk transfer
B. Duplication
C. Diversification
, 4
D. Separation
Diversification
Pacific Bar and Grill was having a problem with employees slipping
and falling in the kitchen and bar areas. Rather than incur the cost to
replace the floors with a new non-slip surface, the owners decided to
require employees to wear slip-resistant shoes and monitor the
floors for spills on a regular schedule. They are also keeping track of
the number of employee slips and falls and the associated costs, as
well as, the expenses involved with this risk management program.
Which one of the following methods is Pacific Bar and Grill using to
measure the effectiveness of this risk management process?
A. Dashboard reporting
B. Feedback loop
C. Scorecard
D. Bow-tie diagram
Feedback loop
Ed is investment manager of the Nellor Foundation, a charitable
trust. Recently, Ed met with the president of the Foundation. Up
until now, assets have been invested in financial assets. Ed told the
president that after performing a simulation, he would like to add a
high-yielding, higher risk real estate investment to the portfolio.
When the president asked if it would be too risky, Ed replied, "It will
actually increase expected returns while reducing risk." The
purported reduction in risk occurs because
