RMI 2302 EXAM 2 REVIEW QUESTIONS
Which of the following provides the basis for insurance: - Answers - 1. Individuals are
risk averse
2. Individuals are willing to pay to avoid risk
3. The law of large numbers allows for risk pooling
Which of the following organizations organized their strategies into short, medium, and
long term strategies? - Answers - Molson-Coors
Which of the following leads to a need for adaptive strategy? - Answers - 1. Shortened
competitive advantage
2. Positional volatility
Which of the following describes the efficient frontier: - Answers - The optimal balance
between risk and reward
Which of the following is true regarding the risk/reward tradeoff for individuals and for
organizations? - Answers - Only individuals use expected utility
At what level do incentives exist: - Answers - Individual, Societal, and Organizational
Which is true regarding CAPM? - Answers - It rewards only systematic risk
Which of the following is true regarding organizations? - Answers - 1. Use an
opportunity cost or cost of capital
2. Discount cash flows back to present value to make decisions
3. Cost of capital is commensurate with risk
Sam requires that her children be on "leashes" at amusement parks because she is
terrified that they will be kidnapped. (I mean, did you read that Facebook story?!) What
kind of bias best describes Sam's fear? - Answers - Media bias
Which of the following indicates that not all responses to incentives are predictable? -
Answers - Unintended consequences
Economics is basically the study of: - Answers - Incentive systems
Pursuit of happiness is an example of which type of incentive: - Answers - Natural
, A bias is a(n) _______ view of risk that alters our decision making - Answers -
Subjective
What effect do political incentives have on the discount rate used to make governmental
decisions? - Answers - Increase the discount rate
Which of the following is NOT true regarding government decision making? - Answers -
1. May be the only entity able to take on certain risks
2. Often cannot easily calculate risk and reward
Undertaking activities because of personal beliefs is best described as what type of
incentive? - Answers - Moral
Which of the following are things that motivate individuals to perform an action? -
Answers - Incentives
Examples of "inappropriate criteria" that may appear in data driven decision making
includes: - Answers - Gender
Which of the following organizations wanted to take "opportunistic risks"? - Answers -
Harley Davidson
Who commissioned the Baker Report? - Answers - BP
According to our second reading on Strategic risk, which of the following is the biggest
strategic risk to Molson-Coors? - Answers - Changes to taxes/regulations
Which of the following are characteristics of typical college students using "Smart Pills"
off prescription: - Answers - Lower GPAs
Which of the following are types of damages awarded by juries in liability cases: -
Answers - Special
Which of the following are categories of risk faced by individuals? - Answers - Property,
Liability, and Financial
Which of the following is NOT one of the elements to a loss exposure? - Answers -
Responsible party of loss
Which category has the highest risk of premature death? - Answers - Wage-earning
adult single with dependents
The article "Risky Business: How data Analytics Can Help" discusses some of the uses
of big data. Big data can be used for: - Answers - Targeted marketing and Identifying
potential employee fraud
Which of the following provides the basis for insurance: - Answers - 1. Individuals are
risk averse
2. Individuals are willing to pay to avoid risk
3. The law of large numbers allows for risk pooling
Which of the following organizations organized their strategies into short, medium, and
long term strategies? - Answers - Molson-Coors
Which of the following leads to a need for adaptive strategy? - Answers - 1. Shortened
competitive advantage
2. Positional volatility
Which of the following describes the efficient frontier: - Answers - The optimal balance
between risk and reward
Which of the following is true regarding the risk/reward tradeoff for individuals and for
organizations? - Answers - Only individuals use expected utility
At what level do incentives exist: - Answers - Individual, Societal, and Organizational
Which is true regarding CAPM? - Answers - It rewards only systematic risk
Which of the following is true regarding organizations? - Answers - 1. Use an
opportunity cost or cost of capital
2. Discount cash flows back to present value to make decisions
3. Cost of capital is commensurate with risk
Sam requires that her children be on "leashes" at amusement parks because she is
terrified that they will be kidnapped. (I mean, did you read that Facebook story?!) What
kind of bias best describes Sam's fear? - Answers - Media bias
Which of the following indicates that not all responses to incentives are predictable? -
Answers - Unintended consequences
Economics is basically the study of: - Answers - Incentive systems
Pursuit of happiness is an example of which type of incentive: - Answers - Natural
, A bias is a(n) _______ view of risk that alters our decision making - Answers -
Subjective
What effect do political incentives have on the discount rate used to make governmental
decisions? - Answers - Increase the discount rate
Which of the following is NOT true regarding government decision making? - Answers -
1. May be the only entity able to take on certain risks
2. Often cannot easily calculate risk and reward
Undertaking activities because of personal beliefs is best described as what type of
incentive? - Answers - Moral
Which of the following are things that motivate individuals to perform an action? -
Answers - Incentives
Examples of "inappropriate criteria" that may appear in data driven decision making
includes: - Answers - Gender
Which of the following organizations wanted to take "opportunistic risks"? - Answers -
Harley Davidson
Who commissioned the Baker Report? - Answers - BP
According to our second reading on Strategic risk, which of the following is the biggest
strategic risk to Molson-Coors? - Answers - Changes to taxes/regulations
Which of the following are characteristics of typical college students using "Smart Pills"
off prescription: - Answers - Lower GPAs
Which of the following are types of damages awarded by juries in liability cases: -
Answers - Special
Which of the following are categories of risk faced by individuals? - Answers - Property,
Liability, and Financial
Which of the following is NOT one of the elements to a loss exposure? - Answers -
Responsible party of loss
Which category has the highest risk of premature death? - Answers - Wage-earning
adult single with dependents
The article "Risky Business: How data Analytics Can Help" discusses some of the uses
of big data. Big data can be used for: - Answers - Targeted marketing and Identifying
potential employee fraud
