rmi 3011 test 1 Question and answers
rated A+
risk - correct answer ✔-a situation involving exposure to danger
-uncertainty concerning the occurrence of a loss
what is objective risk and what happens when the number of exposures
increases - correct answer ✔also called degree of risk, the relative variation
of actual loss from expected loss.
-the more exposure the less objective risk
speculative risk - correct answer ✔uncertainty based on a persons mental
condition or state of mind
chance of loss - correct answer ✔probability that an event will occur
-about probability not risk
pure or static risk - correct answer ✔a situation in which either profit or loss
is possible, not insurable
ex. stock market
nondiversifiable risk - correct answer ✔risk that affect the entire economy or
large group.
ex. rapid inflation, hurricane
diversifiable risk - correct answer ✔a risk that only effects an individual
ex. diversify your stock portfolio
, peril - correct answer ✔the cause of the loss
ex. fire, tornado, flood, burglary
hazard - correct answer ✔a condition that creates or increases the frequency
or severity of a loss
physical hazard - correct answer ✔a physical condition that increases the
frequency or severity of a loss
ex. icy roads
moral hazard - correct answer ✔dishonesty or character defects in someone
that increase frequency and severity of a loss
ex. fraud or faking an accident
how insurance benefits society - correct answer ✔-indemnification for a loss
-reduces worry and fear
-source of investment funds, insurance co's normally reinvest in the
community with hospitals and shopping centers
-loss prevention (informs people how to prevent)
-enhancement of credit score
probable maximum loss - correct answer ✔the worst loss that could happen
to the firm in its life
possible maximum loss - correct answer ✔the worst loss that it likely to
happen
rated A+
risk - correct answer ✔-a situation involving exposure to danger
-uncertainty concerning the occurrence of a loss
what is objective risk and what happens when the number of exposures
increases - correct answer ✔also called degree of risk, the relative variation
of actual loss from expected loss.
-the more exposure the less objective risk
speculative risk - correct answer ✔uncertainty based on a persons mental
condition or state of mind
chance of loss - correct answer ✔probability that an event will occur
-about probability not risk
pure or static risk - correct answer ✔a situation in which either profit or loss
is possible, not insurable
ex. stock market
nondiversifiable risk - correct answer ✔risk that affect the entire economy or
large group.
ex. rapid inflation, hurricane
diversifiable risk - correct answer ✔a risk that only effects an individual
ex. diversify your stock portfolio
, peril - correct answer ✔the cause of the loss
ex. fire, tornado, flood, burglary
hazard - correct answer ✔a condition that creates or increases the frequency
or severity of a loss
physical hazard - correct answer ✔a physical condition that increases the
frequency or severity of a loss
ex. icy roads
moral hazard - correct answer ✔dishonesty or character defects in someone
that increase frequency and severity of a loss
ex. fraud or faking an accident
how insurance benefits society - correct answer ✔-indemnification for a loss
-reduces worry and fear
-source of investment funds, insurance co's normally reinvest in the
community with hospitals and shopping centers
-loss prevention (informs people how to prevent)
-enhancement of credit score
probable maximum loss - correct answer ✔the worst loss that could happen
to the firm in its life
possible maximum loss - correct answer ✔the worst loss that it likely to
happen
