RMI 2302 FSU NYCE EXAM 1 (Q&A) QUESTIONS AND
CORRECT DETAILED ANSWERS (VERIFIED ANSWERS)
ALREADY GRADED A+
Risk Likelihood Ans✓✓✓Frequency - the probability that a loss can
occur.
What 3 ways can Risk Likelihood be categorized Ans✓✓✓High - an
event is expected to happen in most circumstances
Medium - an even will probably happen in many circumstances
Low - an event may occur at some point
Risk Impact Ans✓✓✓Severity - the potential effect that a loss could
have if it arises.
Risk prevention methods are best applied to what? Ans✓✓✓Frequency
of losses
Risk reduction methods are best applied to what? Ans✓✓✓Severity of
losses
Do risk reduction methods have costs that are both monetary and
nonmonetary? Ans✓✓✓Yes. It requires putting a value on human life.
(Consider how to balance risk/reward of how much it is worth spending
to save one life. What is the quality of life if you did save them)
,The frequency states that there is a 25% chance of 1 accident, a 50%
chance of 2 accidents, and a 25% chance of 3 accidents. The severity
states that it costs $10,000 per accident. What is the expected loss?
Ans✓✓✓(how often it occurs * how bad it is when it occurs)
(.25*10,000)+(.50*10,000)+(.25*10,000) = $20,000
Pure risk Ans✓✓✓"will there be a loss or no loss"
only involve 2 possible outcomes
Speculative Risk Ans✓✓✓"will there be a loss, no loss, or a gain?"
What are the eight categories of risk? Ans✓✓✓Static
Dynamic
Core
Secondary
Fundamental
Particular
Speculative
Pure
, What are the 4 sources of risk? Ans✓✓✓Personal
Property
Liability
Financial
What are the 2 types of Hazards? Ans✓✓✓Physical (tangible) and
Intangible Hazards
What are the three types of intangible hazards? Ans✓✓✓Moral
Morale
Societal
What are the three attitudes towards risk? Ans✓✓✓Risk Averse
Risk Seeker
Risk Neutral
What type of attitude is willing to pay more to avoid risk? Ans✓✓✓Risk
Averse
What are examples of financial statements? Ans✓✓✓Dun and
Bradstreet (credit reports), SEC-10K report, annual report, balance
sheet, and income statement.
CORRECT DETAILED ANSWERS (VERIFIED ANSWERS)
ALREADY GRADED A+
Risk Likelihood Ans✓✓✓Frequency - the probability that a loss can
occur.
What 3 ways can Risk Likelihood be categorized Ans✓✓✓High - an
event is expected to happen in most circumstances
Medium - an even will probably happen in many circumstances
Low - an event may occur at some point
Risk Impact Ans✓✓✓Severity - the potential effect that a loss could
have if it arises.
Risk prevention methods are best applied to what? Ans✓✓✓Frequency
of losses
Risk reduction methods are best applied to what? Ans✓✓✓Severity of
losses
Do risk reduction methods have costs that are both monetary and
nonmonetary? Ans✓✓✓Yes. It requires putting a value on human life.
(Consider how to balance risk/reward of how much it is worth spending
to save one life. What is the quality of life if you did save them)
,The frequency states that there is a 25% chance of 1 accident, a 50%
chance of 2 accidents, and a 25% chance of 3 accidents. The severity
states that it costs $10,000 per accident. What is the expected loss?
Ans✓✓✓(how often it occurs * how bad it is when it occurs)
(.25*10,000)+(.50*10,000)+(.25*10,000) = $20,000
Pure risk Ans✓✓✓"will there be a loss or no loss"
only involve 2 possible outcomes
Speculative Risk Ans✓✓✓"will there be a loss, no loss, or a gain?"
What are the eight categories of risk? Ans✓✓✓Static
Dynamic
Core
Secondary
Fundamental
Particular
Speculative
Pure
, What are the 4 sources of risk? Ans✓✓✓Personal
Property
Liability
Financial
What are the 2 types of Hazards? Ans✓✓✓Physical (tangible) and
Intangible Hazards
What are the three types of intangible hazards? Ans✓✓✓Moral
Morale
Societal
What are the three attitudes towards risk? Ans✓✓✓Risk Averse
Risk Seeker
Risk Neutral
What type of attitude is willing to pay more to avoid risk? Ans✓✓✓Risk
Averse
What are examples of financial statements? Ans✓✓✓Dun and
Bradstreet (credit reports), SEC-10K report, annual report, balance
sheet, and income statement.
