Pearson Edexcel International
A+ Graded Paper
2025 CPCU 500 Exam (Multiple Choice) –
Complete Solutions – A+ Graded – 100%
Correct!!– 100% Verified Q&A for Success
Questions and Mark scheme
Version: Final
,Probability analysis is particularly effective for projecting losses in organizations that have
Choose one answer.
A. Elected to estimate probabilities based on external data rather than their own.
B. A limited amount of historical loss data from which to project changes in loss costs.
C. Identified a relatively limited number of potential loss exposures.
D. A substantial volume of data on past losses and fairly stable operations. - ✔✔D. A substantial volume of
data on past losses and fairly stable operations.
The weighted average of all the possible outcomes of a theoretical probability distribution is the
Choose one answer.
A. Expected value.
B. Median.
C. Mode.
D. Dispersion. - ✔✔A. Expected value.
Maria is a risk management professional trying to analyze workers compensation loss frequency by cause of
loss. Which one of the following forms of probability distribution would be most appropriate for her to use?
Choose one answer.
A. Theoretical
B. Discrete
C. Cumulative
D. Continuous - ✔✔B. Discrete
Which one of the following statements is true regarding the use of checklists and questionnaires to identify loss
exposures?
Choose one answer.
A. The completion of standardized checklists helps identify loss exposures and shows how those loss exposures
support or affect specific organizational goals.
B. The questions included in questionnaires and checklists developed by insurers relate mainly to loss
exposures for which commercial insurance is generally available.
C. Standardized risk assessment questionnaires can be used as the sole method to uncover an organization's
loss exposures and reveal key information about those exposures.
D. An advantage of risk assessment questionnaires is that they can be completed with relatively little expense,
time, and effort. - ✔✔B. The questions included in questionnaires and checklists developed by insurers relate
mainly to loss exposures for which commercial insurance is generally available.
Claim adjuster Phyllis is reviewing fire losses. The dollar amounts of the losses are $2,000, $8,000, $10,000,
$15,000, and $20,000. The median loss has an adjusted value of
Choose one answer.
A. $7,500.
B. $10,000
C. $11.000
D. $27,500 - ✔✔B. $10,000
The outcomes in a continuous probability distribution are called probability
Choose one answer.
, A. Severity distributions.
B. Density functions.
C. Distribution values.
D. Data points.
. - ✔✔B. Density functions.
In Fred's large landscaping business, he knows that there is a point where equipment becomes unsafe and
difficult to maintain. Fred realizes that after 2,000 miles of use, his costs for maintenance on his large mowers
and sod busters dramatically rise. Using probability analysis Fred can better know
Choose one answer.
A. When to replace equipment.
B. When to schedule routine maintenance.
C. What type of equipment is needed for future projects.
D. Which equipment is likely to cause bodily injury to operators or customers. - ✔✔A. When to replace
equipment.
Which one of the following statements regarding probability is correct?
Choose one answer.
A. The probability of an event that is absolutely certain is 0.
B. Risk management professionals use theoretical probabilities because they are generally available for and
applicable to claim analysis.
C. Probabilities associated with events such as coin tosses can be developed from theoretical considerations
and are unchanging.
D. The accuracy of theoretical probabilities depends on the size and representative nature of the samples being
studied. - ✔✔C. Probabilities associated with events such as coin tosses can be developed from theoretical
considerations and are unchanging.
Which one of the following refers to dollar values today and involves inflating historical values to reflect the
effect of inflation?
Choose one answer.
A. Current dollars
B. Nominal dollars
C. Constant dollars
D. Actual dollars - ✔✔A. Current dollars
Which one of the following is correct with respect to compliance reviews?
Choose one answer.
A. Compliance reviews determine an organization's compliance with best practices of its industry.
B. The benefit of compliance reviews is that they can help an organization minimize or avoid liability loss
exposures.
C. Compliance reviews are an inexpensive and easy way to identify loss exposures.
D. Compliance reviews may be completed at regular intervals, with little or no ongoing monitoring. - ✔✔B.
The benefit of compliance reviews is that they can help an organization minimize or avoid liability loss
exposures.
When developing loss severity distributions, insurance and risk management professionals should organize loss
data by
Choose one answer.
A+ Graded Paper
2025 CPCU 500 Exam (Multiple Choice) –
Complete Solutions – A+ Graded – 100%
Correct!!– 100% Verified Q&A for Success
Questions and Mark scheme
Version: Final
,Probability analysis is particularly effective for projecting losses in organizations that have
Choose one answer.
A. Elected to estimate probabilities based on external data rather than their own.
B. A limited amount of historical loss data from which to project changes in loss costs.
C. Identified a relatively limited number of potential loss exposures.
D. A substantial volume of data on past losses and fairly stable operations. - ✔✔D. A substantial volume of
data on past losses and fairly stable operations.
The weighted average of all the possible outcomes of a theoretical probability distribution is the
Choose one answer.
A. Expected value.
B. Median.
C. Mode.
D. Dispersion. - ✔✔A. Expected value.
Maria is a risk management professional trying to analyze workers compensation loss frequency by cause of
loss. Which one of the following forms of probability distribution would be most appropriate for her to use?
Choose one answer.
A. Theoretical
B. Discrete
C. Cumulative
D. Continuous - ✔✔B. Discrete
Which one of the following statements is true regarding the use of checklists and questionnaires to identify loss
exposures?
Choose one answer.
A. The completion of standardized checklists helps identify loss exposures and shows how those loss exposures
support or affect specific organizational goals.
B. The questions included in questionnaires and checklists developed by insurers relate mainly to loss
exposures for which commercial insurance is generally available.
C. Standardized risk assessment questionnaires can be used as the sole method to uncover an organization's
loss exposures and reveal key information about those exposures.
D. An advantage of risk assessment questionnaires is that they can be completed with relatively little expense,
time, and effort. - ✔✔B. The questions included in questionnaires and checklists developed by insurers relate
mainly to loss exposures for which commercial insurance is generally available.
Claim adjuster Phyllis is reviewing fire losses. The dollar amounts of the losses are $2,000, $8,000, $10,000,
$15,000, and $20,000. The median loss has an adjusted value of
Choose one answer.
A. $7,500.
B. $10,000
C. $11.000
D. $27,500 - ✔✔B. $10,000
The outcomes in a continuous probability distribution are called probability
Choose one answer.
, A. Severity distributions.
B. Density functions.
C. Distribution values.
D. Data points.
. - ✔✔B. Density functions.
In Fred's large landscaping business, he knows that there is a point where equipment becomes unsafe and
difficult to maintain. Fred realizes that after 2,000 miles of use, his costs for maintenance on his large mowers
and sod busters dramatically rise. Using probability analysis Fred can better know
Choose one answer.
A. When to replace equipment.
B. When to schedule routine maintenance.
C. What type of equipment is needed for future projects.
D. Which equipment is likely to cause bodily injury to operators or customers. - ✔✔A. When to replace
equipment.
Which one of the following statements regarding probability is correct?
Choose one answer.
A. The probability of an event that is absolutely certain is 0.
B. Risk management professionals use theoretical probabilities because they are generally available for and
applicable to claim analysis.
C. Probabilities associated with events such as coin tosses can be developed from theoretical considerations
and are unchanging.
D. The accuracy of theoretical probabilities depends on the size and representative nature of the samples being
studied. - ✔✔C. Probabilities associated with events such as coin tosses can be developed from theoretical
considerations and are unchanging.
Which one of the following refers to dollar values today and involves inflating historical values to reflect the
effect of inflation?
Choose one answer.
A. Current dollars
B. Nominal dollars
C. Constant dollars
D. Actual dollars - ✔✔A. Current dollars
Which one of the following is correct with respect to compliance reviews?
Choose one answer.
A. Compliance reviews determine an organization's compliance with best practices of its industry.
B. The benefit of compliance reviews is that they can help an organization minimize or avoid liability loss
exposures.
C. Compliance reviews are an inexpensive and easy way to identify loss exposures.
D. Compliance reviews may be completed at regular intervals, with little or no ongoing monitoring. - ✔✔B.
The benefit of compliance reviews is that they can help an organization minimize or avoid liability loss
exposures.
When developing loss severity distributions, insurance and risk management professionals should organize loss
data by
Choose one answer.
