RMI 2302 EXAM 1 FSU CASS. COLE QUESTIONS AND
ANSWERS
When considering the risk involved in a specific activity, ________. - Answers - Danger
and risk are not always correlated.
Risk at the individual level can be defined as ________. - Answers - Uncertainty
regarding loss.
Which of the following is NOT a type of funded retention? - Answers - All of the above
are examples of funded retention: reserves, self-insurance, captives.
Sam has a set budget of $5000 for gambling. Sam's casino wagering is an example of
________. - Answers - Speculative Risk
Loss frequency describes which of the following? - Answers - Number of losses
Which of the following is not a category of risk retention? - Answers - Primary vs
Secondary
Which of the following is the last step in the risk management process (but often done
first)? - Answers - Review and Evaluate
When considering organizational risk, businesses have to consider ________. -
Answers - Those risks that prevent the organization from achieving its goals.
Moral/ Morale Hazard - Answers - Behaving differently knowing that someone else will
pay for the loss. ex: Donna leaving her house unlocked because she has insurance
Risk reduction methods are best applied to? - Answers - High severity losses
Insurance is a mechanism for managing ________. - Answers - Pure Risk
How does the mathematical measure of Standard Deviation help risk managers? -
Answers - It measures the difference between what is expected to happen and what
actually happens.
Hazards may be categorized by which of the following groups? - Answers - Tangible
and intangible
, Most risks that are faced by individuals and organizations are ________. - Answers -
Dynamic
Risks affecting a large portion of the population at a given time are which of the
following? - Answers - Fundamental risks
How to find expected return on investment - Answers - (Return A x probability A) +
(Return B x probability B)
Speculative Risk vs Pure Risk - Answers - SPECULATIVE RISK offers the chance of
loss as well as the opportunity for gain. PURE RISK offers only the chance of loss no
gain. Only PURE RISKS are insurable.
In Module 1, we discussed hazards. Slippery roads or fog are examples of a - Answers -
Physical Hazard
In Module 1, we discussed how you measure risk. When measuring risk, frequency is
synonymous with - Answers - Likelihood
In Module 1, we discussed risk (loss) control. Air bags in a vehicle are an example of -
Answers - Risk (loss) Reduction
In Module 1, we discussed the risk management. Which of the following is one of the
"rules of risk management":
I. Consider the odds
II. Don't risk more than you can afford to lose
III. Minimize risk when possible - Answers - I and II
Which of the following allows individuals to substitute a small certain payment for a
larger uncertain possibility of a loss. In other words, what makes insurance possible? -
Answers - Law of Large Numbers
In Module 1, we discussed risk financing. Paying unanticipated losses out of normal
cash flows is an example of - Answers - All of the above: funded retention, unfunded
retention, transfer, unplanned retention
In Module 1, we discussed risk measurement. Which of the following is the best
measure of risk: - Answers - Standard Deviation
In Module 1, we discussed categories of risk. Which of the following categories of risk
represent the risks that have no possibility for gain - Answers - Pure
In Module 1, we discussed sources of risk. The possibility of a home owner being sued
because his dog bit his neighbor, is an example of which source of risk - Answers -
Liability
ANSWERS
When considering the risk involved in a specific activity, ________. - Answers - Danger
and risk are not always correlated.
Risk at the individual level can be defined as ________. - Answers - Uncertainty
regarding loss.
Which of the following is NOT a type of funded retention? - Answers - All of the above
are examples of funded retention: reserves, self-insurance, captives.
Sam has a set budget of $5000 for gambling. Sam's casino wagering is an example of
________. - Answers - Speculative Risk
Loss frequency describes which of the following? - Answers - Number of losses
Which of the following is not a category of risk retention? - Answers - Primary vs
Secondary
Which of the following is the last step in the risk management process (but often done
first)? - Answers - Review and Evaluate
When considering organizational risk, businesses have to consider ________. -
Answers - Those risks that prevent the organization from achieving its goals.
Moral/ Morale Hazard - Answers - Behaving differently knowing that someone else will
pay for the loss. ex: Donna leaving her house unlocked because she has insurance
Risk reduction methods are best applied to? - Answers - High severity losses
Insurance is a mechanism for managing ________. - Answers - Pure Risk
How does the mathematical measure of Standard Deviation help risk managers? -
Answers - It measures the difference between what is expected to happen and what
actually happens.
Hazards may be categorized by which of the following groups? - Answers - Tangible
and intangible
, Most risks that are faced by individuals and organizations are ________. - Answers -
Dynamic
Risks affecting a large portion of the population at a given time are which of the
following? - Answers - Fundamental risks
How to find expected return on investment - Answers - (Return A x probability A) +
(Return B x probability B)
Speculative Risk vs Pure Risk - Answers - SPECULATIVE RISK offers the chance of
loss as well as the opportunity for gain. PURE RISK offers only the chance of loss no
gain. Only PURE RISKS are insurable.
In Module 1, we discussed hazards. Slippery roads or fog are examples of a - Answers -
Physical Hazard
In Module 1, we discussed how you measure risk. When measuring risk, frequency is
synonymous with - Answers - Likelihood
In Module 1, we discussed risk (loss) control. Air bags in a vehicle are an example of -
Answers - Risk (loss) Reduction
In Module 1, we discussed the risk management. Which of the following is one of the
"rules of risk management":
I. Consider the odds
II. Don't risk more than you can afford to lose
III. Minimize risk when possible - Answers - I and II
Which of the following allows individuals to substitute a small certain payment for a
larger uncertain possibility of a loss. In other words, what makes insurance possible? -
Answers - Law of Large Numbers
In Module 1, we discussed risk financing. Paying unanticipated losses out of normal
cash flows is an example of - Answers - All of the above: funded retention, unfunded
retention, transfer, unplanned retention
In Module 1, we discussed risk measurement. Which of the following is the best
measure of risk: - Answers - Standard Deviation
In Module 1, we discussed categories of risk. Which of the following categories of risk
represent the risks that have no possibility for gain - Answers - Pure
In Module 1, we discussed sources of risk. The possibility of a home owner being sued
because his dog bit his neighbor, is an example of which source of risk - Answers -
Liability
