RMI 3011 NYCE EXAM 1 Question and
answers correctly solved
1. The definition of risk contains which important components:
I. Uncertainty
II. Economic loss
III. Premiums - correct answer ✔1 and 2
1. Which of the following are considered "burdens" of risk:
a. Losses
b. Higher borrowing costs
c. Greater liquidity needs
d. All of the above
e. None of the above - correct answer ✔D
1. The cost of risk includes:
a. Outlays to reduce risk
b. Opportunity cost of forgone activities
c. Cost to finance potential losses
d. All of the above
e. None of the above - correct answer ✔D
1. A risk that has changes from year to year (e.g. oil prices):
a. Pure
b. Speculative
c. Static
,d. Dynamic
e. Subjective - correct answer ✔D
1. A risk that has only two outcomes (e.g. auto theft) loss or no loss is
considered:
a. Pure
b. Speculative
c. Static
d. Dynamic
e. Subjective - correct answer ✔A
1. A risk that affects a large portion of the population (e.g. economic
downturn) all at once is considered:
a. Static
b. Dynamic
c. Objective
d. Fundamental
e. Particular - correct answer ✔D
1. Examples of damages that could be paid as part of liability include:
a. Settlements to injured parties
b. Legal fees
c. Fines
d. All of the above
e. None of the above - correct answer ✔D
1. The definition of liability is:
, a. The risk that a person loses their ability to generate income
b. The average loss amount adjusting for loss probability
c. The risk of being held financially liable for "damages" to another party
d. Funeral expenses
e. Medical expenses - correct answer ✔C
1. Loss of income can be caused by:
I. Death
II. Injury/Illness
III. Unemployment
a) I only
b) II only
c) III only
d) I and II
e) I and III
f) II and III
g) I, II, & III - correct answer ✔G
1. Slippery or icy roads increasing the likelihood of an auto accident is an
example of:
a. Moral hazard
b. Physical hazard
c. Risk
d. Peril
e. Asset exposed to loss - correct answer ✔B
answers correctly solved
1. The definition of risk contains which important components:
I. Uncertainty
II. Economic loss
III. Premiums - correct answer ✔1 and 2
1. Which of the following are considered "burdens" of risk:
a. Losses
b. Higher borrowing costs
c. Greater liquidity needs
d. All of the above
e. None of the above - correct answer ✔D
1. The cost of risk includes:
a. Outlays to reduce risk
b. Opportunity cost of forgone activities
c. Cost to finance potential losses
d. All of the above
e. None of the above - correct answer ✔D
1. A risk that has changes from year to year (e.g. oil prices):
a. Pure
b. Speculative
c. Static
,d. Dynamic
e. Subjective - correct answer ✔D
1. A risk that has only two outcomes (e.g. auto theft) loss or no loss is
considered:
a. Pure
b. Speculative
c. Static
d. Dynamic
e. Subjective - correct answer ✔A
1. A risk that affects a large portion of the population (e.g. economic
downturn) all at once is considered:
a. Static
b. Dynamic
c. Objective
d. Fundamental
e. Particular - correct answer ✔D
1. Examples of damages that could be paid as part of liability include:
a. Settlements to injured parties
b. Legal fees
c. Fines
d. All of the above
e. None of the above - correct answer ✔D
1. The definition of liability is:
, a. The risk that a person loses their ability to generate income
b. The average loss amount adjusting for loss probability
c. The risk of being held financially liable for "damages" to another party
d. Funeral expenses
e. Medical expenses - correct answer ✔C
1. Loss of income can be caused by:
I. Death
II. Injury/Illness
III. Unemployment
a) I only
b) II only
c) III only
d) I and II
e) I and III
f) II and III
g) I, II, & III - correct answer ✔G
1. Slippery or icy roads increasing the likelihood of an auto accident is an
example of:
a. Moral hazard
b. Physical hazard
c. Risk
d. Peril
e. Asset exposed to loss - correct answer ✔B
