RMI final exam Correct Questions And Answers(RATED A)

RMI final exam Correct Questions And Answers(RATED A) risk - ANSWER uncertainty concerning the occurrence of a loss loss exposure - ANSWER any situation or circumstance in which a loss is possible, regardless of whether a loss occurs objective risk - ANSWER the relative variance of actual loss form expected loss, decreases as the number of exposures increases (calculable) law of large numbers - ANSWER as the number of exposures increases, the more closely the actual experience will approach expected subjective risk - ANSWER uncertainty based on a person's mental condition or state of mind, the impact varies depending on the individual (mental) chance of loss - ANSWER the probability that an event will occur objective probability - ANSWER the long-run relative frequency of an event based on the assumption of an infinite number of observations and of no change int he underlying conditions subjective probability - ANSWER the individual's personal estimate of the chance of loss peril - ANSWER the cause of a loss hazard - ANSWER a condition that increases the chance of loss or the severity of loss physical hazard - ANSWER a physical condition that increases the frequency or severity of loss moral hazard - ANSWER dishonesty or character defects in an individual that increase the frequency or severity of loss attitudinal hazard (morale hazard) - ANSWER carelessness or indifference to a loss, which increase the frequency or severity of a loss legal hazard - ANSWER refers to characteristics of the legal system or regulatory environment that increase the frequency or severity of loss pure risk - ANSWER a situation in which there are only the possibilities of loss or no loss speculative risk - ANSWER a situation in which either profit or loss is possible diversifiable risk - ANSWER affects only individuals or small groups, also called nonsystematic or particular risk nondiversifiable risk - ANSWER affects the entire economy or large numbers of persons or groups within the economy, also called systemic or fundamental risk enterprise risk - ANSWER encompasses all major risks faced by a business firm, which include: pure risk, speculative risk, strategic risk, operational risk, and financial risk strategic risk - ANSWER uncertainty regarding the firm's financial goals and objectives operational risk - ANSWER results form the firm's business operations financial risk - ANSWER uncertainty of loss because of adverse changes in commodity pr