RMIN 4000 UGA Test 1. Chapters 1-3
Exam Questions and Answers Graded A+
1) Risk management is concerned with
A) the identification and treatment of loss exposures.
B) the management of speculative risks only.
C) the management of pure risks that are uninsurable.
D) the purchase of insurance only - Correct answer-A
1) Traditionally, risk has been defined as
A) any situation in which the probability of loss is one.
B) any situation in which the probability of loss is zero.
C) uncertainty concerning the occurrence of loss.
D) the probability of a loss occurring. - Correct answer-C
1) Which of the following is a characteristic of insurance?
A) pooling of losses
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,B) avoidance of risk
C) payment of intentional losses
D) certainty about specific losses that will occur - Correct answer-A
10) Dense fog that increases the chance of an automobile accident is an example of
A) a speculative risk.
B) a peril.
C) a physical hazard.
D) a moral hazard. - Correct answer-C
10) The worst loss that is likely to happen is referred to as the
A) maximum possible loss.
B) probable maximum loss.
C) frequency of loss.
D) severity of loss - Correct answer-B
10) Which of the following is implied by the requirement that a loss should be
determinable and measurable to be insurable?
I. The loss must be definite as to place.
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,II. The loss must be definite as to amount.
A) I only
B) II only
C) both I and II
D) neither I nor II - Correct answer-C
11) All of the following statements about avoidance are true EXCEPT
A) Certain loss exposures are never acquired.
B) Certain loss exposures may be abandoned.
C) The chance of loss for certain loss exposures may be reduced to zero.
D) It can be used for any loss exposure facing a firm. - Correct answer-D
11) Faking an accident to collect insurance proceeds is an example of
A) physical hazard.
B) objective risk.
C) moral hazard.
D) attitudinal hazard - Correct answer-C
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, 11) Methods by which insurers may minimize or avoid catastrophic losses include
which of the following?
I. The use of reinsurance
II. Concentrating coverage written in one geographic region
A) I only
B) II only
C) both I and II
D) neither I nor II - Correct answer-A
12) Abandoning an existing loss exposure is an example of
A) avoidance.
B) retention.
C) noninsurance transfer.
D) insurance transfer. - Correct answer-A
12) Carelessness or indifference to a loss is an example of
A) physical hazard.
B) objective probability.
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Exam Questions and Answers Graded A+
1) Risk management is concerned with
A) the identification and treatment of loss exposures.
B) the management of speculative risks only.
C) the management of pure risks that are uninsurable.
D) the purchase of insurance only - Correct answer-A
1) Traditionally, risk has been defined as
A) any situation in which the probability of loss is one.
B) any situation in which the probability of loss is zero.
C) uncertainty concerning the occurrence of loss.
D) the probability of a loss occurring. - Correct answer-C
1) Which of the following is a characteristic of insurance?
A) pooling of losses
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,B) avoidance of risk
C) payment of intentional losses
D) certainty about specific losses that will occur - Correct answer-A
10) Dense fog that increases the chance of an automobile accident is an example of
A) a speculative risk.
B) a peril.
C) a physical hazard.
D) a moral hazard. - Correct answer-C
10) The worst loss that is likely to happen is referred to as the
A) maximum possible loss.
B) probable maximum loss.
C) frequency of loss.
D) severity of loss - Correct answer-B
10) Which of the following is implied by the requirement that a loss should be
determinable and measurable to be insurable?
I. The loss must be definite as to place.
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,II. The loss must be definite as to amount.
A) I only
B) II only
C) both I and II
D) neither I nor II - Correct answer-C
11) All of the following statements about avoidance are true EXCEPT
A) Certain loss exposures are never acquired.
B) Certain loss exposures may be abandoned.
C) The chance of loss for certain loss exposures may be reduced to zero.
D) It can be used for any loss exposure facing a firm. - Correct answer-D
11) Faking an accident to collect insurance proceeds is an example of
A) physical hazard.
B) objective risk.
C) moral hazard.
D) attitudinal hazard - Correct answer-C
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, 11) Methods by which insurers may minimize or avoid catastrophic losses include
which of the following?
I. The use of reinsurance
II. Concentrating coverage written in one geographic region
A) I only
B) II only
C) both I and II
D) neither I nor II - Correct answer-A
12) Abandoning an existing loss exposure is an example of
A) avoidance.
B) retention.
C) noninsurance transfer.
D) insurance transfer. - Correct answer-A
12) Carelessness or indifference to a loss is an example of
A) physical hazard.
B) objective probability.
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