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RMI Exam 1 Questions With Verified
Answers
There is a great deal of debate regarding what people expect of their government. Government's
may redistribute income through which of the following:
I.Market intervention
II.Transfer payments
III.Taxation - Answers✔market intervention, transfer payments, and taxation
In module 1 we discussed the six steps of the risk management process. Risk (loss) Reduction is
aimed at:
A.Frequency
B.Severity
C.Both frequency and severity
D.Retention
E.None of the above - Answers✔severity
Which of the following causes the "invisible hand mechanism" to break down:
I. Positive Externalities
II. Pitfalls in Decision Making
III. Negative Externalities - Answers✔positive externalities, negative externalities
In module 1 we discussed the six steps of the risk management process. The primary post-loss
objective of an organization is:
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ALL RIGHTS RESERVED.
A.Profitability
B.Survival
C.Social Activism
D.Retention
E.None of the above - Answers✔survival
Which term best describes the "information problem" where one party to a transaction has
more/better information about the risk than the other party?
A.Exposure
B.Peril
C.Legal Hazard
D.Adverse Selection
E.Moral Hazard - Answers✔adverse selection
Fed Ex & UPS have thousands of trucks on the road every day. Each of these trucks are:
A.An exposure
B.A peril
C.A hazard
D.Adverse Selection
E.Moral Hazard - Answers✔an exposure
Which of the following allows individuals to substitute a small certain payment for a larger
uncertain possibility of a loss, in other words, what makes insurance possible?
A.Expected Value
B.Standard Deviation
C.Law of Large Numbers
D.All of the above
E.None of the above - Answers✔law of large numbers
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Olivia fails to be careful with her laptop because she purchased the insurance coverage on it.
Olivia's behavior is an example of:
A.Physical hazard
B.Moral hazard
C.Adverse Selection
D.Genetic Predisposition
E.Teenagerism - Answers✔moral hazard
In module 1 we discussed sources of risk. The possibility of a lawyer being sued because of
giving poor legal advice, is an example of which source of risk:
A.Personal
B.Property
C.Liability
D.Static
E.Dynamic - Answers✔liability
Avoiding risky activity is a method of:
A.Risk (loss) control
B.Risk (loss) financing
C.Internal risk reduction
D.Retention
E.Hedging - Answers✔risk (loss) control
In module 1 we discussed risk (loss) control. Anti-lock brakes in a vehicle are an example of:
A.Risk (loss) prevention
B.Risk (loss) reduction
C.Investments in information
ALL RIGHTS RESERVED.
RMI Exam 1 Questions With Verified
Answers
There is a great deal of debate regarding what people expect of their government. Government's
may redistribute income through which of the following:
I.Market intervention
II.Transfer payments
III.Taxation - Answers✔market intervention, transfer payments, and taxation
In module 1 we discussed the six steps of the risk management process. Risk (loss) Reduction is
aimed at:
A.Frequency
B.Severity
C.Both frequency and severity
D.Retention
E.None of the above - Answers✔severity
Which of the following causes the "invisible hand mechanism" to break down:
I. Positive Externalities
II. Pitfalls in Decision Making
III. Negative Externalities - Answers✔positive externalities, negative externalities
In module 1 we discussed the six steps of the risk management process. The primary post-loss
objective of an organization is:
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
A.Profitability
B.Survival
C.Social Activism
D.Retention
E.None of the above - Answers✔survival
Which term best describes the "information problem" where one party to a transaction has
more/better information about the risk than the other party?
A.Exposure
B.Peril
C.Legal Hazard
D.Adverse Selection
E.Moral Hazard - Answers✔adverse selection
Fed Ex & UPS have thousands of trucks on the road every day. Each of these trucks are:
A.An exposure
B.A peril
C.A hazard
D.Adverse Selection
E.Moral Hazard - Answers✔an exposure
Which of the following allows individuals to substitute a small certain payment for a larger
uncertain possibility of a loss, in other words, what makes insurance possible?
A.Expected Value
B.Standard Deviation
C.Law of Large Numbers
D.All of the above
E.None of the above - Answers✔law of large numbers
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Olivia fails to be careful with her laptop because she purchased the insurance coverage on it.
Olivia's behavior is an example of:
A.Physical hazard
B.Moral hazard
C.Adverse Selection
D.Genetic Predisposition
E.Teenagerism - Answers✔moral hazard
In module 1 we discussed sources of risk. The possibility of a lawyer being sued because of
giving poor legal advice, is an example of which source of risk:
A.Personal
B.Property
C.Liability
D.Static
E.Dynamic - Answers✔liability
Avoiding risky activity is a method of:
A.Risk (loss) control
B.Risk (loss) financing
C.Internal risk reduction
D.Retention
E.Hedging - Answers✔risk (loss) control
In module 1 we discussed risk (loss) control. Anti-lock brakes in a vehicle are an example of:
A.Risk (loss) prevention
B.Risk (loss) reduction
C.Investments in information
