RMI 300: Exam 2 Questions with
Accurate Answers
actual cash value correct answer replacement cost new - the depreciation on lost
property
actuary correct answer what pricing should be for categories
adhesion correct answer must adhere to contract as written by the insurance
company
adverse selection correct answer tendency of buyers with higher than average
expected losses to buy more coverage than buyers with lower than average
expected losses when charged the same premium
agent correct answer work for company
as the number of observations increases... correct answer the relative dispersion
decreases and the distribution approaches a "normal" distribution
asymmetric information correct answer policyholders have more information
than insurers so they predict wrong price
avoid insurer catastrophe correct answer limit situations with positive correlation
, avoidance correct answer making decisions with the intention of eliminating
either some existing potential for loss or a future potential for loss from a new
venture
benefits of funded reserve correct answer have money on hand to pay for losses
otherwise would need a loan
benefits of unfunded reserve correct answer can invest cash in something to
make more money
broker correct answer work for policyholder; marry them to company
Can you deduct reserves for tax purposes? correct answer Yes, if you are an
insurance company
claims adjuster correct answer understand what went wrong to cause the loss
coefficient of variation correct answer standard deviation/expected value
collectively exhaustive correct answer account for all possibilities
combined ratio correct answer for every one premium dollar, how much goes out
in total
combined ratio equation correct answer loss ratio + expense ratio
Accurate Answers
actual cash value correct answer replacement cost new - the depreciation on lost
property
actuary correct answer what pricing should be for categories
adhesion correct answer must adhere to contract as written by the insurance
company
adverse selection correct answer tendency of buyers with higher than average
expected losses to buy more coverage than buyers with lower than average
expected losses when charged the same premium
agent correct answer work for company
as the number of observations increases... correct answer the relative dispersion
decreases and the distribution approaches a "normal" distribution
asymmetric information correct answer policyholders have more information
than insurers so they predict wrong price
avoid insurer catastrophe correct answer limit situations with positive correlation
, avoidance correct answer making decisions with the intention of eliminating
either some existing potential for loss or a future potential for loss from a new
venture
benefits of funded reserve correct answer have money on hand to pay for losses
otherwise would need a loan
benefits of unfunded reserve correct answer can invest cash in something to
make more money
broker correct answer work for policyholder; marry them to company
Can you deduct reserves for tax purposes? correct answer Yes, if you are an
insurance company
claims adjuster correct answer understand what went wrong to cause the loss
coefficient of variation correct answer standard deviation/expected value
collectively exhaustive correct answer account for all possibilities
combined ratio correct answer for every one premium dollar, how much goes out
in total
combined ratio equation correct answer loss ratio + expense ratio
