RMIN 4000 Exam Questions and Answers 100% Verified!

Risk - ANSWER-Uncertainty concerning the occurrence of a loss Loss exposure - ANSWER-any situation or circumstance in which a loss might occur (regardless of if it happens or not) - ex: When we think about if we might get sick.. my body is the exposure. If I have a business and 10 buildings.. My buildings are exposures. Objective risk - ANSWER-relative variation of actual loss from expected loss. Law of large numbers - ANSWER-as the # of exposures increases the more closely the actual loss will get to the expected. Pure risk - ANSWER-there's no up-side to the risk (nothing good comes from it), chance of loss or chance of no loss Speculative risk - ANSWER-There is a chance for a win or a gain, you're creating a risk. Ex: golden balls (split or steal) or gambling or buying a house - when we go to sell it, there could be a gain or a sell. Subjective risk - ANSWER-uncertainity based on a person's mental condition or state of mind. How we feel about the loss. Ex:$500 is different for a poor person and a rich person - sister's afraid of water and atkinson is afraid of ziplining - the risks are the same, but affects them differently (different way of handling it) Chance of loss - ANSWER-the probability that an event will occur Objective probability - ANSWER-the long-run relative frequency of an event based on the assumptions of an infinite # of observations and no change in underlying conditions Subjective probability - ANSWER-the individual's personal estimate of the chance of loss. Ex: sending annthrax in the mail. - this cost companies a lot of money, when in reality only 5 letters were actually sent with annthrax in them. - so this probably wasn't a huge risk, but it was in light of 9/11 Risk Averse - ANSWER-Avoid Risk if and when possible. Will pay extra to remove risk from a set of outcomes.