RMIN 4000 Ragin Test 1 Questions &Answers 100% Verified!
risk - ANSWER-a calculated possibility of a negative outcome (loss and probability)
possibility - ANSWER-a probabilistic outcome that is known or estimated
loss - ANSWER-must be quantifiable, typically in dollar amounts
pure risk - ANSWER-risk with only two future potential states of the world (ex. flood, time of death, cancer)
speculative risk - ANSWER-risk with three potential states of the world: loss, break even, or gain (ex. investments, gambling)
moral hazard - ANSWER-idea that if you have insurance, you are more likely to take larger risks and change your behavior (ex. bugatti veyron, RAND Health Insurance Experiment - 1984)
fundamental risk - ANSWER-risk that every firm/person in a sample face at the same time and to a similar extent (ex. inflation, unemployment, major catastrophes)
systemic risk - ANSWER-instability in the financial system caused by interdependency between players and the market
particular risk - ANSWER-risk that only applies to one or a small number of people/firms
at the same time (ex. fire, theft, collision)
risk averse - ANSWER-don't like risk, will pay money to offload risk
risk seeking - ANSWER-like risk, will pay money to take on risk (ex. skydiving, poker, Google)
frequency of loss - ANSWER-how often do losses happen?
severity of loss - ANSWER-how much are losses in dollar amounts when they do occur?
exposure - ANSWER-the asset that could be lost
perils - ANSWER-the immediate cause of the loss (action verb)
risk - ANSWER-a calculated possibility of a negative outcome (loss and probability)
possibility - ANSWER-a probabilistic outcome that is known or estimated
loss - ANSWER-must be quantifiable, typically in dollar amounts
pure risk - ANSWER-risk with only two future potential states of the world (ex. flood, time of death, cancer)
speculative risk - ANSWER-risk with three potential states of the world: loss, break even, or gain (ex. investments, gambling)
moral hazard - ANSWER-idea that if you have insurance, you are more likely to take larger risks and change your behavior (ex. bugatti veyron, RAND Health Insurance Experiment - 1984)
fundamental risk - ANSWER-risk that every firm/person in a sample face at the same time and to a similar extent (ex. inflation, unemployment, major catastrophes)
systemic risk - ANSWER-instability in the financial system caused by interdependency between players and the market
particular risk - ANSWER-risk that only applies to one or a small number of people/firms
at the same time (ex. fire, theft, collision)
risk averse - ANSWER-don't like risk, will pay money to offload risk
risk seeking - ANSWER-like risk, will pay money to take on risk (ex. skydiving, poker, Google)
frequency of loss - ANSWER-how often do losses happen?
severity of loss - ANSWER-how much are losses in dollar amounts when they do occur?
exposure - ANSWER-the asset that could be lost
perils - ANSWER-the immediate cause of the loss (action verb)
