LOMA 291 UPDATED ACTUAL Questions And Correct Answers
C
Terms in this set (400)
Stakeholders (constituents) A party that has an interest in how a company conducts its business
Dividend Compensation that a company may pay to owners upon a vote by thr company's
board of directors
Reinsurance Insurance that one insurance company, the direct writer, purchases from another
insurance company, the reinsurer, to transfer all or part of the risk on insurance
policies that the direct writer issued
Inside directors A member of the board of directors who also holds a position within the company
Outside directors (independent directors) A member of the board of directors who does not bold a position within the
company
Ombudsman Program An independent, impartial and confidential professional who provides ethical
guidance on specific problems
Line function A department or other organizational unit that produces or administers products
or services
Ex. Product development, marketing, distribution & sales, underwriting & new
business, customer service, reinsurance administration, claims
, Support functions (staff function) A department or other organizational unit that provides support services to line
functions or to other support functions but does not produce or administer
products
Ex. Accounting & financial reporting, audit, corporate communications, legal &
compliance, finance, HR, IT, treasury, risk management
Vertical organization An organization w a long chain of command and a narrow span of control
Flat Organization An organization w a short chain of command and a wide span of control. Also
called a horizontal organization
Organization by product An organizational structure which arranged a company's major divisions
according to the company's product lines
Ex. Annuities & Life Insurance, Property & Casualty Insurance
Organization by territory An organizational structure which arranged a company's major divisions
according to the geographic areas in which it operates
Ex. Americas, Asia Pacific, Europe
Organization by customer group An organizational structure which arranges a company's major divisions according
to the customer group each unit serves
Ex. Group products (commercial), Individual Business (personal)
Organization by distribution channel An organizational structure which arranges a company's major divisions according
to the distribution channels that deliver products to customers
Required return The return an investor needs to earn in order to make the investment, given the
risk of the investment; typically found by adding the risk free rate of return to the
risk premium
Risk free rate The return on a risk free investment (the least risky investment opportunity
available)
Risk premium The component of investment return that compensates the investor for taking on
the risk associated w a specific investment; the rate of return required in addition
to the risk free rate for the investor to make the investment
Investment risk The possibility that an investor will fail to earn some or all of an expected return
or will lose all or part of the original investment
Market risk (financial market risk) A risk of unexpected outcomes due to fluctuations in the market values in a given
financial market
Interest rate risk The risk that unpredictable movements or stagnation in market interest rates will
cause assets to lose value or liabilities to gain value
Default risk The risk that a borrower will fail to repay their debt
C
Terms in this set (400)
Stakeholders (constituents) A party that has an interest in how a company conducts its business
Dividend Compensation that a company may pay to owners upon a vote by thr company's
board of directors
Reinsurance Insurance that one insurance company, the direct writer, purchases from another
insurance company, the reinsurer, to transfer all or part of the risk on insurance
policies that the direct writer issued
Inside directors A member of the board of directors who also holds a position within the company
Outside directors (independent directors) A member of the board of directors who does not bold a position within the
company
Ombudsman Program An independent, impartial and confidential professional who provides ethical
guidance on specific problems
Line function A department or other organizational unit that produces or administers products
or services
Ex. Product development, marketing, distribution & sales, underwriting & new
business, customer service, reinsurance administration, claims
, Support functions (staff function) A department or other organizational unit that provides support services to line
functions or to other support functions but does not produce or administer
products
Ex. Accounting & financial reporting, audit, corporate communications, legal &
compliance, finance, HR, IT, treasury, risk management
Vertical organization An organization w a long chain of command and a narrow span of control
Flat Organization An organization w a short chain of command and a wide span of control. Also
called a horizontal organization
Organization by product An organizational structure which arranged a company's major divisions
according to the company's product lines
Ex. Annuities & Life Insurance, Property & Casualty Insurance
Organization by territory An organizational structure which arranged a company's major divisions
according to the geographic areas in which it operates
Ex. Americas, Asia Pacific, Europe
Organization by customer group An organizational structure which arranges a company's major divisions according
to the customer group each unit serves
Ex. Group products (commercial), Individual Business (personal)
Organization by distribution channel An organizational structure which arranges a company's major divisions according
to the distribution channels that deliver products to customers
Required return The return an investor needs to earn in order to make the investment, given the
risk of the investment; typically found by adding the risk free rate of return to the
risk premium
Risk free rate The return on a risk free investment (the least risky investment opportunity
available)
Risk premium The component of investment return that compensates the investor for taking on
the risk associated w a specific investment; the rate of return required in addition
to the risk free rate for the investor to make the investment
Investment risk The possibility that an investor will fail to earn some or all of an expected return
or will lose all or part of the original investment
Market risk (financial market risk) A risk of unexpected outcomes due to fluctuations in the market values in a given
financial market
Interest rate risk The risk that unpredictable movements or stagnation in market interest rates will
cause assets to lose value or liabilities to gain value
Default risk The risk that a borrower will fail to repay their debt
