CAIB 2 FULL QUESTIONS AND CORRECT
ANSWERS FINAL PAPER
●● A stock company is...
a. A company that invests in other companies
b. A company owned by stockholders who provide the capital to start
and run the company
c. Is owned by customers of the company
d. A company that owns livestock
Answer: b. A company owned by stockholders who provide the capital
to start and run the company
●● The difference between pure and speculative risk is...
a. Speculative risk is insurable but pure risk is not
b. Speculative risk means that there is a chance to gain or lose whereas
one can only lose with pure risk
c. Speculative risk means that there is only the chance to lose whereas
pure risk means you have a chance to win too
,d. Speculative risk is a term invented by marine insurance companies in
1864
Answer: b. Speculative risk means that there is a chance to gain or lose
whereas one can only lose with pure risk
●● A legally enforceable agreement between 2 or more parties is defined
as...
a. A contract
b. An agreement
c. A will
d. A contract of consideration
Answer: a. A contract
●● What are the 4 methods of dealing with risk?
Answer: Avoidance,
control,
retention,
transfer
●● A reduction in value is called a...
a. Loss
b. Unlucky situation
, c. Claim
d. Transfer
Answer: a. Loss
●● What elements must be present to constitute a legal contract?
a. Parties to the contract, the contract itself, consideration
b. Parties to the contract, a written document, consideration, and legal
purpose
c. Agreement, consideration, legality of object, legal capacity, genuine
intention
d. Competent parties, consideration, warranty, and legal purpose
Answer: c. Agreement, consideration, legality of object, legal capacity,
genuine intention
●● The act of intentionally giving up some right or privilege is...
a. A representation
b. A transfer
c. A waiver
d. Subrogation
Answer: c. A waiver
ANSWERS FINAL PAPER
●● A stock company is...
a. A company that invests in other companies
b. A company owned by stockholders who provide the capital to start
and run the company
c. Is owned by customers of the company
d. A company that owns livestock
Answer: b. A company owned by stockholders who provide the capital
to start and run the company
●● The difference between pure and speculative risk is...
a. Speculative risk is insurable but pure risk is not
b. Speculative risk means that there is a chance to gain or lose whereas
one can only lose with pure risk
c. Speculative risk means that there is only the chance to lose whereas
pure risk means you have a chance to win too
,d. Speculative risk is a term invented by marine insurance companies in
1864
Answer: b. Speculative risk means that there is a chance to gain or lose
whereas one can only lose with pure risk
●● A legally enforceable agreement between 2 or more parties is defined
as...
a. A contract
b. An agreement
c. A will
d. A contract of consideration
Answer: a. A contract
●● What are the 4 methods of dealing with risk?
Answer: Avoidance,
control,
retention,
transfer
●● A reduction in value is called a...
a. Loss
b. Unlucky situation
, c. Claim
d. Transfer
Answer: a. Loss
●● What elements must be present to constitute a legal contract?
a. Parties to the contract, the contract itself, consideration
b. Parties to the contract, a written document, consideration, and legal
purpose
c. Agreement, consideration, legality of object, legal capacity, genuine
intention
d. Competent parties, consideration, warranty, and legal purpose
Answer: c. Agreement, consideration, legality of object, legal capacity,
genuine intention
●● The act of intentionally giving up some right or privilege is...
a. A representation
b. A transfer
c. A waiver
d. Subrogation
Answer: c. A waiver
