Risk Management Exam 1 (Already Graded A+)

(T/F) Professionals define risk exposure as the proportion of an asset, the person, the entity (etc.) facing the potential loss. correct answers True Which one of the following statements best applies to "risk?" correct answers A risk is an uncertain future event that, if it happens, will affect the expected outcome. Which of the following is liquidity risk? correct answers The risk that an asset cannot be bought or sold rapidly enough to cut losses in a volatile market Issues are risks that have yet to occur. correct answers False, Issues are risks (outcomes of events) that have already occurred. Which of the following statements about speculative risks is correct? correct answers Speculative risk is a risk of losses due to unrealistic return expectations, which affects those who fail to do proper research before investing. Which of the following statements is correct about risks? correct answers Systematic risks affect entire markets or economics and are difficult to predict and manage. Which of the following are pure risks? Check all that apply. correct answers Innovational risk. Natural disaster risk. Mortality risk. (T/F) Pure and speculative risks feature some chance of loss and some chance of gain. correct answers False Kelly recently purchased a new car after losing her previous one to a crash. Which risks are Kelly exposed to as the result of this new acquisition? correct answers Accident (loss and casualty), property damage liability, mechanical failure. Which of the following is true about uncertainty and risk? correct answers You need to have uncertainty to face a risk. Which of the following is an example of financial risks? correct answers Credit (default) risk Which of the following is true about uncertainties? correct answers Uncertainties are future events with two or more outcomes. John purchased a ticket for a vacation in Paris in June. He will fly American Airlines to Paris where he will visit the Eiffel Tower and the Louvres Museum. Which of the following statements correctly define the types of risks John is exposed to? correct answers John is facing only pure risks Which of the following is an attitude toward risk? correct answers Risk tolerance