BDU CPCU 500 UPDATED ACTUAL Exam
Questions and CORRECT Answers
Which of the following statements is correct regarding risk and related terms? - CORRECT
ANSWER - A peril is the cause of a loss, such as a theft or a fire.
Stacy has determined there is a 10% chance she will be injured sky diving. This is an example of:
- CORRECT ANSWER - Quantifying risk
Which one of the following statements is correct regarding the concept of risk? - CORRECT
ANSWER - Probability can be used to decide which risk management techniques to use.
A correct statement regarding probabilities is that they: - CORRECT ANSWER - Can be
used to decide what activities to undertake.
Which one of the following statements is correct regarding classification of risk? - CORRECT
ANSWER - Pure risk involves the possibility of loss or no loss.
Insurance is primarily designed to address: - CORRECT ANSWER - Pure Risk
Which one of the following statements is correct regarding the classification of risk? -
CORRECT ANSWER - Every business venture involves speculative risks, because
speculative risks involve a chance of gain.
The best example of pure risk is: - CORRECT ANSWER - Driving to work in an old car
The best example of diversifiable risk is: - CORRECT ANSWER - Financial risk
,Which one of the following statements is correct regarding the classification of risk> -
CORRECT ANSWER - Private insurance tends to focus on diversifiable risks, while
government insurance is typically appropriate for non-diversifiable risks.
Which one of the following represents a type of risk that enterprise-wide risk management would
treat, but that traditional risk management would not? - CORRECT ANSWER - Risk of
legislative changes
One enterprise-wide risk management approach involves dividing risks into quadrants. Which
one of the following statements is correct regarding these quadrants? - CORRECT
ANSWER - Strategic risks are speculative risks that fall outside the operational risk
category.
Insurable risks are generally categorized as: - CORRECT ANSWER - Pure, objective, and
diversifiable
Tommy recently received a gift from his father in the amount of $30,000. He would like to make
a purchase, but is concerned with the risks associated with the different assets purchased. If
Tommy decides to purchase a rental property with the gift, Tommy will have: - CORRECT
ANSWER - Both pure and speculative risk
Tommy recently received a gift from his father in the amount of $80,000. He is planning on
purchasing an expensive sports car with the money. If Tommy decides to purchase the car,
Tommy will have: - CORRECT ANSWER - Diversifiable risk
Which one of the following statements is correct regarding expected cost of losses or gains? -
CORRECT ANSWER - Calculating the expected costs of gains or losses is more difficult
for speculative risks than for pure risks.
A correct statement regarding the cost of residual uncertainty is that it: - CORRECT
ANSWER - Can be minimized, but doing so is costly
, Which one of the following statements is correct regarding the cost of residual uncertainty? -
CORRECT ANSWER - Society benefits from the great differences in residual uncertainty
that individuals and organizations are willing to accept.
Which of the following represents a hidden cost associated with an industrial accident? -
CORRECT ANSWER - Time lost by other employees who witnessed the accident
Office furniture, copyrights, and cash are all examples of: - CORRECT ANSWER - Assets
exposed to losses
A hazard that is evidenced by dishonest tendencies is referred as a : - CORRECT
ANSWER - Moral hazard
Which one of the following statements is correct regarding loss exposures? - CORRECT
ANSWER - For an organization, human resources are considered an asset that is exposed
to losses.
For traditional risk management and insurance purposes, loss exposures are typically divided up
into: - CORRECT ANSWER - Liability, net income, property, and personnel loss exposure
Which one of the following statements is correct regarding the elements of loss exposure? -
CORRECT ANSWER - Net income loss exposure can result from personnel, liability and
property losses.
Tom has a habit of leaving his home unlocked when he leaves to go shopping. Tom's behavior is
an example of: - CORRECT ANSWER - Morale hazard
Valerie ran into some financial difficulty due to a gambling problem. She embezzled some
money from her employer to help pay her rent. Valerie's behavior is an example of: - CORRECT
ANSWER - Moral hazard
Questions and CORRECT Answers
Which of the following statements is correct regarding risk and related terms? - CORRECT
ANSWER - A peril is the cause of a loss, such as a theft or a fire.
Stacy has determined there is a 10% chance she will be injured sky diving. This is an example of:
- CORRECT ANSWER - Quantifying risk
Which one of the following statements is correct regarding the concept of risk? - CORRECT
ANSWER - Probability can be used to decide which risk management techniques to use.
A correct statement regarding probabilities is that they: - CORRECT ANSWER - Can be
used to decide what activities to undertake.
Which one of the following statements is correct regarding classification of risk? - CORRECT
ANSWER - Pure risk involves the possibility of loss or no loss.
Insurance is primarily designed to address: - CORRECT ANSWER - Pure Risk
Which one of the following statements is correct regarding the classification of risk? -
CORRECT ANSWER - Every business venture involves speculative risks, because
speculative risks involve a chance of gain.
The best example of pure risk is: - CORRECT ANSWER - Driving to work in an old car
The best example of diversifiable risk is: - CORRECT ANSWER - Financial risk
,Which one of the following statements is correct regarding the classification of risk> -
CORRECT ANSWER - Private insurance tends to focus on diversifiable risks, while
government insurance is typically appropriate for non-diversifiable risks.
Which one of the following represents a type of risk that enterprise-wide risk management would
treat, but that traditional risk management would not? - CORRECT ANSWER - Risk of
legislative changes
One enterprise-wide risk management approach involves dividing risks into quadrants. Which
one of the following statements is correct regarding these quadrants? - CORRECT
ANSWER - Strategic risks are speculative risks that fall outside the operational risk
category.
Insurable risks are generally categorized as: - CORRECT ANSWER - Pure, objective, and
diversifiable
Tommy recently received a gift from his father in the amount of $30,000. He would like to make
a purchase, but is concerned with the risks associated with the different assets purchased. If
Tommy decides to purchase a rental property with the gift, Tommy will have: - CORRECT
ANSWER - Both pure and speculative risk
Tommy recently received a gift from his father in the amount of $80,000. He is planning on
purchasing an expensive sports car with the money. If Tommy decides to purchase the car,
Tommy will have: - CORRECT ANSWER - Diversifiable risk
Which one of the following statements is correct regarding expected cost of losses or gains? -
CORRECT ANSWER - Calculating the expected costs of gains or losses is more difficult
for speculative risks than for pure risks.
A correct statement regarding the cost of residual uncertainty is that it: - CORRECT
ANSWER - Can be minimized, but doing so is costly
, Which one of the following statements is correct regarding the cost of residual uncertainty? -
CORRECT ANSWER - Society benefits from the great differences in residual uncertainty
that individuals and organizations are willing to accept.
Which of the following represents a hidden cost associated with an industrial accident? -
CORRECT ANSWER - Time lost by other employees who witnessed the accident
Office furniture, copyrights, and cash are all examples of: - CORRECT ANSWER - Assets
exposed to losses
A hazard that is evidenced by dishonest tendencies is referred as a : - CORRECT
ANSWER - Moral hazard
Which one of the following statements is correct regarding loss exposures? - CORRECT
ANSWER - For an organization, human resources are considered an asset that is exposed
to losses.
For traditional risk management and insurance purposes, loss exposures are typically divided up
into: - CORRECT ANSWER - Liability, net income, property, and personnel loss exposure
Which one of the following statements is correct regarding the elements of loss exposure? -
CORRECT ANSWER - Net income loss exposure can result from personnel, liability and
property losses.
Tom has a habit of leaving his home unlocked when he leaves to go shopping. Tom's behavior is
an example of: - CORRECT ANSWER - Morale hazard
Valerie ran into some financial difficulty due to a gambling problem. She embezzled some
money from her employer to help pay her rent. Valerie's behavior is an example of: - CORRECT
ANSWER - Moral hazard
