LOMA 335 THE INSURANCE COMPANY AND OPERATIONS MANAGEMENT (MODULE 3) EXAM VERIFIED 100% CORRECT

LOMA 335 THE INSURANCE COMPANY AND OPERATIONS MANAGEMENT (MODULE 3) EXAM VERIFIED 100% CORRECT ___________ bias refers to a consistent cognitive error resulting from the tendency to interpret and report data in terms of the observer's own culture. - Answer-Cultural ___________ bias is a consistent error in research outcomes that arises when people perform better because they know they're being studied. - Answer-Attention _________ acceptance bias refers to a consistent cognitive error based on a tendency for individuals to make socially acceptable statements even when they feel something else. - Answer-Social A _________ is an item or system that simulates something else. - Answer-model __________ modeling is a form of modeling that uses the processing capabilities of IT to perform millions of simulations at once. - Answer-Computational Decision __________ are the simple-to-understand rules a decision maker uses to evaluate decision alternatives. - Answer-criteria Decision ___________ are practical limitations that affect the selection of decision alternatives. - Answer-constraints States of _________ are potential influences on the outcome of a decision that aren't under a decision maker's control. Ex: market conditions such as changing interest rates and new market entrants - Answer-nature ____________ models are mathematical constructs for projecting unknown or future outcomes using known results or data. - Answer-Forecasting Forecasting models allow users to find approximate values to represent unknowns, called ___________. - Answer-estimates _________-series models estimate unknown future values based on known, historical data. - Answer-Time _________-series data is information about a variable over successive periods. - Answer-Time The simplest time-series model is called the __________ time-series model, where a forecaster uses the data value(s) for the most recent period as the forecast value(s) for the next future period. - Answer-naive ________ time-series models are easy to use and can be useful for estimating values that don't change much from period to period. - Answer-Naive Another simple form of time-series model is the __________ average model, which uses the arithmetic average of a series of values (the mean) from previous periods as the forecast value for the next future period. - Answer-arithmetic The __________ average model gives equal weight to all data periods, regardless of the age of those periods. Note: This means old data is equally as important as new data. - Answer-arithmetic 1) The ________ moving average model is closely related to the arithmetic average model. 2) It also requires finding the mean data value, but it considers only a specified number, n, of the most recent data values. Note: Each time the model is used, the data value from the oldest period is eliminated and the data value from the most recent period is included. This can more accurately reflect changing conditions than can the arithmetic average model. - Answer-simple The ________ moving average time-series model assigns relative weights to the data values used in the forecast. Note: Typically, more recent data are assigned a greater weight or importance than are older data. As with the simple moving average model, when values from new data periods become available, new data are added to the model and the oldest data are removed. - Answer-weighted 1) A ________ model uses historical data and other relevant variables as a basis for describing unknown future data points. 2) In effect, these models create _____________ using patterns. - Answer-1) casual 2) projections ___________ models generate projections with excellent accuracy if the relationships between variables can be expressed in numerical terms. - Answer-Casual _____________ is a measure of whether, and how strongly, two values are related. - Answer-Correlation Values __________ when a change in one value is associated with a consistent and equivalent change (positive or negative) in the other value. - Answer-correlate True or False: Correlation doesn't prove causation. - Answer-True ___________ modeling refers to a computer-based mathematical model that approximates the operation of real-world financial processes. - Answer-Financial Most financial models consist of: - Answer-inputs, processes, outputs ________ generally take the form of variables, which are items of data with values that change over time. - Answer-Inputs The input variables used in financial models are ___________ variables, which are variables that influence the behavior of another variable. - Answer-independent ____________ usually simulate the behavior of known values and use those behaviors to identify how unknown values are likely to behavior over time. - Answer-Processes ___________ represent the projected future values produced by processing input variables through the model. - Answer-Outputs Output variables are considered ____________ variables because they react to outside influences. - Answer-dependent Financial models either generate __________ estimates or __________ estimates. - Answer-point range A _________ estimate is an estimated result that's assigned a single value. Note: An important application of this for insurance companies would be for calculating product profitability based on interest earnings. - Answer-point A _________ estimate is a result that includes possible values within specified limits. - Answer-range A ________ is the projected value of an outcome from a decision. - Answer-payoff A _________ table is a decision analysis tool that summarizes potential outcomes from a decision in a tabular format. - Answer-payoff A __________ payoff table is a type of payoff table showing two or more states of nature. Note: Each cell in such a payoff table contains a projected pay-off value based on at least 2 conditions: 1) a decision alternative and 2) a state of nature - Answer-conditional In a conditional payoff table: - Answer-1) the list of decision alternatives must be complete 2) the decision alternatives must be mutually exclusive 3) the list of the states of nature directly relevant to the decision must be complete 4) the states of nature must be mutually exclusive Payoff ___________ is a formal approach to decision making wherein each combination of a decision alternative and a state of nature results in a potential payoff. - Answer-analysis A ____________ decision alternative is one that consistently produces the best expected payoff for all states of nature. - Answer-dominant Finding a dominant decision alternative requires determining the best ________ for each state of nature, which in a table is the highest positive value in each state of nature column. - Answer-payoff True or False: In most payoff tables, no decision alternative is clearly best for all possible states of nature. - Answer-True Models have important limitations as well as benefits: - Answer-1) model results require continuous monitoring for accuracy 2) a mathematical model of operations is useful only to the extent that it represents real-world operations 3) many models don't account for non-numeric aspects of business In business, data ___________ (also called data collection) refers to the tasks involved in obtaining and storing information relevant to the business question. - Answer-acquisition