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ARM 400 - Segment A - Chapters 1, 2, & 3 Questions with
Detailed Verified Answers
Sets of data that are too large to be gathered and analyzed by traditional methods Ans: ✓ ✓ ✓ Big
Data
An innovative item that uses sensors; wireless sensor networks; and data collection, transmission,
and analysis to further enable the item to be faster, more useful, or otherwise improved Ans: ✓ ✓
✓ Smart Product
A network of objects that transmit data to and from each other without human interaction Ans: ✓
✓ ✓ Internet of Things (IoT)
Information, technology, and storage services contractually provided from remote locations,
through the internet or another network, without a direct server connection. Ans: ✓ ✓ ✓ Cloud
Computing
A distributed digital ledger that facilitates secure transactions without the need for a third party
Ans: ✓ ✓ ✓ Blockchain
Text Mining Ans: ✓ ✓ ✓ Obtaining information through language recognition
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The use of technological devices in vehicles with wireless communication and GPS tracking that
transmit data to businesses or government agencies; some return information for the driver Ans: ✓
✓ ✓ Telematics
Amount of risk an organization is willing to take on in order to achieve an anticipated result or
return Ans: ✓ ✓ ✓ Risk Appetite
A technique to quantify financial risk by measuring the likelihood of losing more than a specific
dollar amount over a specific period of time Ans: ✓ ✓ ✓ Value at risk (VaR)
the total cost incurred by an organization because of the possibility of accidental loss Ans: ✓ ✓ ✓
cost of risk
any condition that presents a possibility of gain or loss, whether or not an actual loss occurs Ans: ✓
✓ ✓ Exposure
Frequent fluctuations, such as in the price of an asset Ans: ✓ ✓ ✓ Volatility
A qualitative estimate of the certainty with which the outcome of a specific event can be predicted
Ans: ✓ ✓ ✓ Likelihood
the effects, positive or negative, of an occurrence Ans: ✓ ✓ ✓ consequences
Estimated duration Ans: ✓ ✓ ✓ Time Horizon
A relationship between variables Ans: ✓ ✓ ✓ correlation
a chance of loss or no loss, but no chance of gain Ans: ✓ ✓ ✓ pure risk
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a chance of loss, no loss, or gain Ans: ✓ ✓ ✓ Speculative risk
The risk that customers or other creditors will fail to make promised payments as they come due
Ans: ✓ ✓ ✓ Credit Risk
the perceived amount of risk based on an individual's or organization's opinion Ans: ✓ ✓ ✓
Subjective risk
the measurable variation in uncertain outcomes base on facts and data Ans: ✓ ✓ ✓ Objective risk
A risk that affects only some individuals, businesses or small groups
Not highly correlated - gains and losses tend to occur randomly Ans: ✓ ✓ ✓ Diversifiable Risk
The potential for a major disruption in the function of an entire market or financial system Ans: ✓
✓ ✓ Systemic Risk
Uncertainty about an investment's future value because of potential changes in the market for that
type of investment Ans: ✓ ✓ ✓ Market Risk
The risk that an asset cannot be sold on short notice without incurring a loss Ans: ✓ ✓ ✓ Liquidity
Risk
What are the basic risk measures? Ans: ✓ ✓ ✓ 1. exposure
2. volatility
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3. Likelihood
4. Consequences
5. Time Horizon
6. Correlation
Name the classifications of risk Ans: ✓ ✓ ✓ Pure vs. Speculative
Subjective vs. Objective
Diversifiable vs. Nondiversifiable
Quadrants of risk (hazard, operational, financial, and strategic)
What two factors highly affect speculative risk? Ans: ✓ ✓ ✓ Price risk & credit risk
Uncertainty about cash flows resulting from possible changes in the cost of raw materials and other
inputs (such as lumber, gas or electricity), as well as cost-related changes in the market for
completed products and other outputs Ans: ✓ ✓ ✓ Price risk
Examples: Inflation, unemployment, natural disasters, system risks
Correlated Ans: ✓ ✓ ✓ Non-diversifiable risk
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ARM 400 - Segment A - Chapters 1, 2, & 3 Questions with
Detailed Verified Answers
Sets of data that are too large to be gathered and analyzed by traditional methods Ans: ✓ ✓ ✓ Big
Data
An innovative item that uses sensors; wireless sensor networks; and data collection, transmission,
and analysis to further enable the item to be faster, more useful, or otherwise improved Ans: ✓ ✓
✓ Smart Product
A network of objects that transmit data to and from each other without human interaction Ans: ✓
✓ ✓ Internet of Things (IoT)
Information, technology, and storage services contractually provided from remote locations,
through the internet or another network, without a direct server connection. Ans: ✓ ✓ ✓ Cloud
Computing
A distributed digital ledger that facilitates secure transactions without the need for a third party
Ans: ✓ ✓ ✓ Blockchain
Text Mining Ans: ✓ ✓ ✓ Obtaining information through language recognition
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,Click here for more: Scholars nexus
The use of technological devices in vehicles with wireless communication and GPS tracking that
transmit data to businesses or government agencies; some return information for the driver Ans: ✓
✓ ✓ Telematics
Amount of risk an organization is willing to take on in order to achieve an anticipated result or
return Ans: ✓ ✓ ✓ Risk Appetite
A technique to quantify financial risk by measuring the likelihood of losing more than a specific
dollar amount over a specific period of time Ans: ✓ ✓ ✓ Value at risk (VaR)
the total cost incurred by an organization because of the possibility of accidental loss Ans: ✓ ✓ ✓
cost of risk
any condition that presents a possibility of gain or loss, whether or not an actual loss occurs Ans: ✓
✓ ✓ Exposure
Frequent fluctuations, such as in the price of an asset Ans: ✓ ✓ ✓ Volatility
A qualitative estimate of the certainty with which the outcome of a specific event can be predicted
Ans: ✓ ✓ ✓ Likelihood
the effects, positive or negative, of an occurrence Ans: ✓ ✓ ✓ consequences
Estimated duration Ans: ✓ ✓ ✓ Time Horizon
A relationship between variables Ans: ✓ ✓ ✓ correlation
a chance of loss or no loss, but no chance of gain Ans: ✓ ✓ ✓ pure risk
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a chance of loss, no loss, or gain Ans: ✓ ✓ ✓ Speculative risk
The risk that customers or other creditors will fail to make promised payments as they come due
Ans: ✓ ✓ ✓ Credit Risk
the perceived amount of risk based on an individual's or organization's opinion Ans: ✓ ✓ ✓
Subjective risk
the measurable variation in uncertain outcomes base on facts and data Ans: ✓ ✓ ✓ Objective risk
A risk that affects only some individuals, businesses or small groups
Not highly correlated - gains and losses tend to occur randomly Ans: ✓ ✓ ✓ Diversifiable Risk
The potential for a major disruption in the function of an entire market or financial system Ans: ✓
✓ ✓ Systemic Risk
Uncertainty about an investment's future value because of potential changes in the market for that
type of investment Ans: ✓ ✓ ✓ Market Risk
The risk that an asset cannot be sold on short notice without incurring a loss Ans: ✓ ✓ ✓ Liquidity
Risk
What are the basic risk measures? Ans: ✓ ✓ ✓ 1. exposure
2. volatility
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3. Likelihood
4. Consequences
5. Time Horizon
6. Correlation
Name the classifications of risk Ans: ✓ ✓ ✓ Pure vs. Speculative
Subjective vs. Objective
Diversifiable vs. Nondiversifiable
Quadrants of risk (hazard, operational, financial, and strategic)
What two factors highly affect speculative risk? Ans: ✓ ✓ ✓ Price risk & credit risk
Uncertainty about cash flows resulting from possible changes in the cost of raw materials and other
inputs (such as lumber, gas or electricity), as well as cost-related changes in the market for
completed products and other outputs Ans: ✓ ✓ ✓ Price risk
Examples: Inflation, unemployment, natural disasters, system risks
Correlated Ans: ✓ ✓ ✓ Non-diversifiable risk
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