RMI 2101 Exam 1 Latest Version Graded A+

RMI 2101 Exam 1 Latest Version Graded A+ Risk Uncertainty about future losses No uncertainty= no risk Probablilty of a loss -Likelihood of a loss - Range from 0-1 or 0% to 100% Common Elements of pure risk and speculative risk _Involve uncertainty Differences in Pure and Speculative risk -Difference is in the outcomes or "possible future state of world" Pure Risk Possible Outcomes Loss No loss Speculative Risk Outcomes Loss, No loss, gain Pure Risk Examples Natural Disasters, Flood, fire, theft, sickness Speculative Risk Examples Gambling, Investments, Starting new business, develop new product line What is Homeownership? Pure or Specualtive BOTH Static Risk Does not really change signifcantly overtime I.E Natrual Disasters Dynamic Risk A result in changing circumstances, laws, and conditions Major Types of pure risk Personal, Property, liability Human Capital -Ability to generate Income - Subject to life and health/exposures to loss (injury, illness, sickness, death) Financial Consequences in terms of human capital -Loss of income, Medical (Economic Loss) -Unemployment/retirement (Loss of income) Personal Pure Risk Everyone has human Capital Personal Pure Risk of ownership financial or physical assets -Damaged of theft Direct Losses in ownership of financial or assests -Replacement Cost -Repair cost Indirect losses in ownership of financial or Physical Assests -Loss of income -Extra Expneses Losses from negligent use of an asset Judgement or legal fees Peril Immediate cause of the loss