PCU 500 Exam Study Guide | Comprehensive Preparation for Commercial Property Insurance

PCU 500 Exam Study Guide |
Comprehensive Preparation for
Commercial Property Insurance

,In the context of risk, the chance of being injured while driving to and from
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work, loading a truck at work, moving furniture at home, or falling in an icy
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parking lot at the mall are all examples of
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A. Possibilities.

B. Uncertainties.

C. Probabilities.

D. Losses. - Correct Answer-A. Possibilities.
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The statement, "There is a five percent chance that John will be injured in
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an automobile accident while driving to work tomorrow," is an example of
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A. Quantifying risk. j




B. Verifying risk. j




C. Quantifying loss exposures. j j




D. Identifying hazards. - Correct Answer-A. Quantifying risk. j j j j j j




Which one of the following is measurable and quantifies risk?
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A. Probability

B. Possibility

C. Uncertainty

D. Feasibility - Correct Answer-A. Probability j j j j




One of the elements of risk is uncertainty. Which one of the following best describes
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the uncertainty that risk involves?
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A. Uncertainty as to how to manage potential losses j j j j j j j

,B. Uncertainty as to whether a negative outcome is possible j j j j j j j j




C. Uncertainty as to the type and timing of an outcome j j j j j j j j j




D. Uncertainty as to whether insurance is available - Correct Answer-C. j j j j j j j j j j




Uncertainty as to the type and timing of an outcome j j j j j j j j j




Hardware Store has been able to control its prices and inventory since it has no
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competitors. A new highway currently being constructed is going to allow j j j j j j j j j j j




increased competition for Hardware Store. According to the quadrants of risk,
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this risk of increased competition falls into the category of
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A. Strategic risk. j




B. Hazard risk. j




C. Operational j risk.

D. Financial risk. - Correct Answer-A. Strategic risk. j j j j j j




Company G is a manufacturer of high profile golf equipment. The risk
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management professional for Company G is concerned about loss of j j j j j j j j j j




business related to product design. Failing to respond to changing customer
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demand and preferences in the design of golf clubs could cost Company G
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significant market share. Categorized according to the quadrants of risk, this
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exposure to loss would be classified as a(n) j j j j j j j




A. Strategic risk. j




B. Financial risk. j




C. Operational j risk.

D. Hazard risk. - Correct Answer-A. Strategic risk. j j j j j j




George has received an inheritance and is deciding what to do with the money.
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He has limited his options to four choices: donate all the money to his favorite
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charity, use the entire inheritance to buy a yacht, invest the inheritance in a
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small rental property, or use the entire amount to purchase T-bills. Which one
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of the following statements is true regarding the risk involved in George's
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options?

A. Donating his inheritance to charity is a pure risk; there is no j j j j j j j j j j j j




uncertainty that the money will be gone and George will have no j j j j j j j j j j j j




chance of profit. j j




B. Buying a boat is a nondiversifiable risk because George can only afford
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, topurchaseasingle yacht.
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