CPCU 551 PRACTICE QUESTIONS AND CORRECT DETAILED
ANSWERSS UPDATE QUIZ-S.
Assignment 1:
Customer Mary gave dry cleaner Ike her fur coat so he could remove a
large stain. Ike could not eliminate the stain so he asked restoration
specialist Peter to attempt to remove it.
The bailor in this scenario is:
a) Peter
b) Both Ike and Peter
c) Mary
d) Ike
ANSWERS:
c) Mary
,Assignment 1:
A self-supporting solid wall that prevents a fire from passing through or
around it is a __________
a) Fire wall
b) Fire stop
c) Fire division
d) Hostile fire
ANSWERS:
a) Fire wall
Assignment 1:
If the organization wishes to pre-fund for retained future losses, it must
determine the present value of the expected future losses. Calculating the
present value of a future amount is known as _______
,a) Depreciating
b) Indexing
c) Compounding
d) Discounting
ANSWERS:
d) Discounting
Assignment 1:
Which one of the following is the primary advantage of using retention
as a risk financing measure to help an organization meet its risk
financing goals?
a) Complying with legal requirements
b) Managing the cost of risk
c) Paying for losses
, d) Managing cash flow variability
ANSWERS:
b) Managing the cost of risk
Assignment 1:
Which one of the following statements is true with regard to the
selection of appropriate risk financing measures?
a) It is typically more economical for an organization to retain rather
than transfer loss exposures directly related to its core operations.
b) Diversifying loss exposures tends to reduce the accuracy of loss
estimates, and increases the uncertainty regarding future losses.
c) An organization that undertakes extensive risk control measures is
less likely to have the ability to fund retention of its loss exposures.
d) The higher an organization's willingness to accept risk, the higher the
likelihood that transfer will be used to cover its loss exposures.
ANSWERSS UPDATE QUIZ-S.
Assignment 1:
Customer Mary gave dry cleaner Ike her fur coat so he could remove a
large stain. Ike could not eliminate the stain so he asked restoration
specialist Peter to attempt to remove it.
The bailor in this scenario is:
a) Peter
b) Both Ike and Peter
c) Mary
d) Ike
ANSWERS:
c) Mary
,Assignment 1:
A self-supporting solid wall that prevents a fire from passing through or
around it is a __________
a) Fire wall
b) Fire stop
c) Fire division
d) Hostile fire
ANSWERS:
a) Fire wall
Assignment 1:
If the organization wishes to pre-fund for retained future losses, it must
determine the present value of the expected future losses. Calculating the
present value of a future amount is known as _______
,a) Depreciating
b) Indexing
c) Compounding
d) Discounting
ANSWERS:
d) Discounting
Assignment 1:
Which one of the following is the primary advantage of using retention
as a risk financing measure to help an organization meet its risk
financing goals?
a) Complying with legal requirements
b) Managing the cost of risk
c) Paying for losses
, d) Managing cash flow variability
ANSWERS:
b) Managing the cost of risk
Assignment 1:
Which one of the following statements is true with regard to the
selection of appropriate risk financing measures?
a) It is typically more economical for an organization to retain rather
than transfer loss exposures directly related to its core operations.
b) Diversifying loss exposures tends to reduce the accuracy of loss
estimates, and increases the uncertainty regarding future losses.
c) An organization that undertakes extensive risk control measures is
less likely to have the ability to fund retention of its loss exposures.
d) The higher an organization's willingness to accept risk, the higher the
likelihood that transfer will be used to cover its loss exposures.
