CPCU 500 (insurance designation) Exam
Questions and Answers Graded A+
Risk - Correct answer-the uncertainty about outcomes, with the possibility that
some of the outcomes can be negative. Quantified by knowing the probability of
the possible outcomes
Probability - Correct answer-the likelihood that an outcome or event will occur.
Probabilities are stated as a decimal figure, a percentage, or a fraction.
What are the 2 elements associated with risk? - Correct answer-uncertainty of
outcome + possibility of negative outcome
Pure Risk - Correct answer-a chance of loss or no loss, but no chance of gain.
Speculative Risk - Correct answer-a chance of gain or loss (investment).
Price Risk - Correct answer-the uncertainty over the size of cash flows resulting
from possible changes in the cost of raw materials and other inputs (lumber, gas, or
electricity)
Credit Risk - Correct answer-the risk that customers and other debtors will fail to
make promised payments.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
Questions and Answers Graded A+
Risk - Correct answer-the uncertainty about outcomes, with the possibility that
some of the outcomes can be negative. Quantified by knowing the probability of
the possible outcomes
Probability - Correct answer-the likelihood that an outcome or event will occur.
Probabilities are stated as a decimal figure, a percentage, or a fraction.
What are the 2 elements associated with risk? - Correct answer-uncertainty of
outcome + possibility of negative outcome
Pure Risk - Correct answer-a chance of loss or no loss, but no chance of gain.
Speculative Risk - Correct answer-a chance of gain or loss (investment).
Price Risk - Correct answer-the uncertainty over the size of cash flows resulting
from possible changes in the cost of raw materials and other inputs (lumber, gas, or
electricity)
Credit Risk - Correct answer-the risk that customers and other debtors will fail to
make promised payments.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
