FIN 341 EXAM 2 HIGH-YIELD TOPICS SUMMARY 2026

FIN 341 EXAM 2 HIGH-YIELD TOPICS SUMMARY
2026

◉ Post-Loss Objectives.
Answer: prepare for potential losses in the most economical way
reduce anxiety
meet legal obligations


◉ Post-Loss Objectives of Risk Management.
Answer: 1. Survival of the firm
2. Continue operating
3. Stability of earnings
4. Continued growth of the firm
5. Minimize the effects that a loss will have on other persons and on
society


◉ Steps in the Risk Management Process.
Answer: 1. Identify loss exposures
2. Measure and analyze the loss exposures
3. Select the appropriate combination of techniques for treating the
loss exposures
4. Implement and monitor the risk management program

, ◉ Risk Identification.
Answer: Risk analysis questionnaires and checklists
physical inspection
flowcharts
financial statements
historical loss data


◉ Risk evaluation.
Answer: Loss frequency- probable number of losses
Loss severity- probable size of loss
Rank by importance
Loss severity is more important


◉ maximum possible loss.
Answer: the worst loss that could happen to the firm during its
lifetime


◉ probable maximum loss.
Answer: the worst loss that is likely to happen


◉ Basic Statistics- risk evaluation.