ARM 402: Full Practice Exam: Frequently
Missed Questions & Terminology
Which one of the following is a type of intellectual property protection?
A) Tort
B) Contract
C) Infringement
D) Trade secret - correct answer ✔D
An organization that operates warehouses in two locations is using the risk
control technique of
A) Diversification
B) Separation
C) Duplication
D) Loss prevention - correct answer ✔B
A large deductible is similar to a self-insured retention (SIR) in that both
A) Give the insurer complete control over claim handling
B) Provide detailed reports to the insurer on all claims
C) Require the insured organization to retain a relatively large amount of loss
D) Require that the insured adjust and pay claims up to the deductible or SIR
amount - correct answer ✔C
In a legal dispute between parties from different countries, which one of the
following sets of issues must be considered?
,A) Jurisdiction and legal system
B) Comity and political implications
C) Political implications and future trade
D) Jurisdiction and comity - correct answer ✔D
Pools can help an organization meet which one of the following risk financing
goals through economies of scale in administration and the purchase of
excess insurance or reinsurance?
A) Maintain liquidity
B) Pay for losses
C) Minimize the costs of risk
D) Manage uncertainty - correct answer ✔C
A U.S. based company that has international operations may use a controlled
master program to insure all of its operations. Which one of the following
statements regarding a controlled master program is true?
A) Usually there are separate policies for the domestic U.S. exposures
B) Excess and umbrella liability apply only to coverage on U.S. operations
C) The master policy is excess over locally purchased admitted coverage and
can be no broader than the underlying policies
D) The U.S. company is required to purchase all of the coverages through
locally admitted insurers - correct answer ✔A
A rating plan that adjusts the premium for the current policy period to
recognize the loss experience of the insured organization during past policy
periods is
, A) A finite insurance rating plan
B) An experience rating plan
C) A retrospective rating plan
D) A minimum premium rating plan - correct answer ✔B
In both noninsurance risk control and noninsurance risk financing transfers
A) The transfer becomes effective only when the transferee actually performs
the action that rids the transferor of risk
B) A contract is usually formed before any loss occurs
C) The transferor has protection regardless of the transferee's bankruptcy
D) The transferor has protection only after the funds to restore a loss are paid
- correct answer ✔B
Which one of the following types of intellectual property protection
automatically applies to any work of expression when it becomes fixed in a
tangible medium?
A) Trade secret
B) Copyright
C) Trademark
D) Patent - correct answer ✔B
Any organization can self-insure its loss exposures, provided that
A) The state in which it operates permits self-insurance plans
Missed Questions & Terminology
Which one of the following is a type of intellectual property protection?
A) Tort
B) Contract
C) Infringement
D) Trade secret - correct answer ✔D
An organization that operates warehouses in two locations is using the risk
control technique of
A) Diversification
B) Separation
C) Duplication
D) Loss prevention - correct answer ✔B
A large deductible is similar to a self-insured retention (SIR) in that both
A) Give the insurer complete control over claim handling
B) Provide detailed reports to the insurer on all claims
C) Require the insured organization to retain a relatively large amount of loss
D) Require that the insured adjust and pay claims up to the deductible or SIR
amount - correct answer ✔C
In a legal dispute between parties from different countries, which one of the
following sets of issues must be considered?
,A) Jurisdiction and legal system
B) Comity and political implications
C) Political implications and future trade
D) Jurisdiction and comity - correct answer ✔D
Pools can help an organization meet which one of the following risk financing
goals through economies of scale in administration and the purchase of
excess insurance or reinsurance?
A) Maintain liquidity
B) Pay for losses
C) Minimize the costs of risk
D) Manage uncertainty - correct answer ✔C
A U.S. based company that has international operations may use a controlled
master program to insure all of its operations. Which one of the following
statements regarding a controlled master program is true?
A) Usually there are separate policies for the domestic U.S. exposures
B) Excess and umbrella liability apply only to coverage on U.S. operations
C) The master policy is excess over locally purchased admitted coverage and
can be no broader than the underlying policies
D) The U.S. company is required to purchase all of the coverages through
locally admitted insurers - correct answer ✔A
A rating plan that adjusts the premium for the current policy period to
recognize the loss experience of the insured organization during past policy
periods is
, A) A finite insurance rating plan
B) An experience rating plan
C) A retrospective rating plan
D) A minimum premium rating plan - correct answer ✔B
In both noninsurance risk control and noninsurance risk financing transfers
A) The transfer becomes effective only when the transferee actually performs
the action that rids the transferor of risk
B) A contract is usually formed before any loss occurs
C) The transferor has protection regardless of the transferee's bankruptcy
D) The transferor has protection only after the funds to restore a loss are paid
- correct answer ✔B
Which one of the following types of intellectual property protection
automatically applies to any work of expression when it becomes fixed in a
tangible medium?
A) Trade secret
B) Copyright
C) Trademark
D) Patent - correct answer ✔B
Any organization can self-insure its loss exposures, provided that
A) The state in which it operates permits self-insurance plans
