RMI 2302 Chapter 1- Basic Of Risk Exam Questions With Verified Answers

RMI 2302 Chapter 1- Basic Of Risk Exam Questions With Verified Answers What is Risk? - answerUncertainty Regarding Loss How to measure risk? - answerIn Standard Deviation or Variation Can information alter risk? - answerNo, but it can alter uncertainty Pure Risk - answerA category of risk in which loss is the only possible outcome; there is no beneficial result Speculative Risk - answerA category of risk that, when undertaken, results in an uncertain degree of gain or loss. Static Risk - answerAre the losses that are caused by factors other than a change in the economy Example of Static Risk - answerhurricanes, earthquakes, other natural disasters Dynamic Risk - answerAre the result of the economy changing Example of Dynamic Risk - answerInflation, recession, and other business cycle changes Fundamental Risk - answerExposure to loss from a situation affecting a large group of people or firms, and caused by (a) natural phenomenon or (b) social phenomenon Particular Risk - answerExposure to loss from a situation associated with specific individual events, such as a break-in, fire, or robbery. Personal Risk - answerIs the exposure to financial loss and/or additional expenses resulting from premature death or disability Property Risk - answerThe possibility of financial loss occurring as the result of owing a real estate investment Liability Risk - answerRisk to a company arising from the possibility of liability for damages resulting from the purchase, ownership, or use of a good or service offered by that company. Financial Risk - answerThe possibility that shareholders will lose money when they invest in a company that has debt, if the company's cash flow proves inadequate to meet its financial obligations.