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ARM 401 Exam Practice with 100% correct answers |
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ARM 401 Exam PracticeA 35-year-old female was employed at a company for five years. During her term of
employment the company began having financial difficulty and determined that they needed
to layoff 5 of its 125 employees in order to stay in business. The company laid off the female
employee and 4 other female coworkers. All of the women had a history of receiving positive
employee evaluations. The laid-off workers filed a claim against the company alleging
discrimination. Which one of the following best describes the basis of the employment
practices claim filed against the company?
A. Sexual harassment
B. Retaliation
C. Age discrimination
D. Wrongful termination - correct answer-D
A 5 Whys analysis is used primarily for problems involving
A. Environmental factors.
B. Technology.
C. Human factors.
D. Construction. - correct answer-C
A banking organization is attempting to control cyber risks to their online banking site by all
means necessary. A procedural control option for them is
A. Training of employees on attitudes and behaviors to prevent loss.
B. Centralizing responsibilities for cyber security by appointing a chief information officer.
C. Implementing a biometrics security feature for key personnel.
D. Using firewalls, antivirus software, and data encryption. - correct answer-D
A chart showing the probability of obtaining the numbers one through six on one roll of one
die represents a
A. Trend analysis distribution.
B. Empirical probability distribution.
C. Theoretical probability distribution.
D. Continuous probability distribution. - correct answer-C
A coefficient of variation is derived by
A. Taking the square root of the sum of the squares of the differences between the outcomes
and the mean of a distribution.
B. Dividing a distribution's standard deviation by its mean.
C. Summing the squares of the differences between various points and a straight line on a
graph.
D. Dividing a distribution's standard deviation by its mode. - correct answer-B
A company's benefit administrator, while acting on behalf of the company, invested 100
percent of the plan funds in speculative stock. The return on the investment was ten fold.
The duty violated by the plan fiduciary in this instance is
A. Diversification.
,B. Prudence.
C. Loyalty.
D. Adherence. - correct answer-A
A conscious act or decision not to act that reduces the frequency and/or severity of losses or
makes losses more predictable is
A. Risk control.
B. Risk prevention.
C. A risk source.
D. A consequence of risk. - correct answer-A
A construction company based in the U.S. has building contracts in five different foreign
nations. The construction company agreed to accept payment for its work in each country's
currency. The risk of loss of value when these foreign payments are converted to U.S.
dollars is called
A. Pure risk.
B. Credit risk.
C. Exchange-rate risk.
D. Liquidity risk. - correct answer-C
A contract programmer agrees to construct a website for a chocolate candy retailer in order
to increase its on-line marketing presence. The programmer agrees to have the website up
and running in time for Easter but has to cut some corners to meet the deadline and leaves
out a security feature. The website is hacked and the chocolate candy retailer misses the
Easter candy season. Which one of the following best describes the programmer's cyber risk
loss exposure?
A. The programmer has an extra expense exposure.
B. The programmer has an errors and omissions liability exposure.
C. The programmer has an advertising injury liability exposure.
D. The programmer has an intellectual property liability exposure. - correct answer-B
A corporate board of directors owes which one of the following duties regarding material
information about a corporation's loss exposures and changes to them?
A. Duty to give due weight and consideration
B. Duty to disclose
C. Duty to assess
D. Duty to procure coverage - correct answer-B
A corporation owned by its shareholders is controlled by its
A. Proxies.
B. Management.
C. Board of Advisors.
D. Board of Directors. - correct answer-D
A data analysis technique that an insurer would likely use to analyze claims adjusters' notes
is
A. Social network analysis.
B. A classification tree.
,C. Text mining.
D. Regression. - correct answer-C
A disadvantage of value-at-risk (VaR) is that VaR
A. Does not accurately measure the extent to which a loss might exceed the threshold.
B. Uses monetary units to express the potential loss rather than percentages.
C. Expresses complex positions in a single value.
D. Quantifies the potential loss associated with an investment decision. - correct answer-A
A female supervisor consistently reprimands male, but not female, employees for using the
Internet for personal use. This is an example of
A. Disparate impact.
B. Overt discrimination.
C. Disparate treatment.
D. Sexual harassment. - correct answer-C
A financial analyst wants to evaluate the effect that a predicted increase in the cost of steel
will have on the net income of East Side Manufacturing. Which one of the following
measurement techniques should the analyst use?
A. Cost at risk
B. Earnings at risk
C. Conditional value at risk
D. Value at risk - correct answer-B
A financial ratio of income adjusted for risk to the amount of capital required to maintain
solvency at a given risk tolerance level is called
A. Risk-adjusted return on capital.
B. Return on economic capital.
C. Return on book value.
D. Risk-based capital. - correct answer-A
A first party can incur network security liability when its database is breached if it damages a
third party's network as a result of
A. Content that infringes another party's trademark being placed on a website.
B. Content that infringes another party's copyright being placed on a website.
C. Libelous content being placed on a website.
D. Malicious code being transmitted to the third party's network. - correct answer-D
A group of large life insurance companies pooled their mortality data over the past 25 years.
Based on the pooled mortality data, a mortality table showing the probability of death at
specified ages was developed. The insurers used these probabilities in pricing life insurance
products. The probabilities developed from the pooled mortality experience of the insurers
are best described as
A. Dependent probabilities.
B. Empirical probabilities.
C. Conditional probabilities.
D. Theoretical probabilities. - correct answer-B
, A land developer hired Build Rite Construction Company to build three sets of starter homes
in a Metro City suburb. The construction is to be completed in phases, with completion of
each phase (Phase 1, then Phase 2, and then Phase 3) required before the next
construction phase can begin. As this is a large scale project, Build Rite's controller used
computer simulation to analyze the time necessary for completion of each phase. The best
case, most likely, and worst case results, respectively, are summarized below. Based on the
simulation results, which one of the following statements is true?
Phase 1: 15 months, 16 months, 18 months
Phase 2: 10 months, 12 months, 24 months
Phase 3: 17 months, 20 months, 36 months
A. Under the best case scenario, construction of all three phases will be completed in three
or few years.
B. Construction will be completed in exactly four years.
C. Under the worst case scenario, construc - correct answer-D
A main difference between decision trees and event trees is
A. That decision trees have one possible outcome; event trees have several possible
outcomes.
B. The portrayal and analysis of various pathways.
C. The process that is used to prepare the diagrams.
D. That event trees analyze the consequences of accidental events rather than decisions. -
correct answer-D
A matrix of the likelihood and potential impact consequences of the organization's risks is
called a
A. Risk analysis.
B. Risk register.
C. Risk identification.
D. Risk map. - correct answer-D
A new coffee company based in Indonesia has found a demand for its product in North
America. As such, it has established three locations in the United States and one in Canada.
The Board of Directors has concerns about the 'farm to fork' concept being it is sending
product many miles from Indonesia to North America. As a result, the board has highlighted
a few concerns that could be showstoppers for a successful North American product launch.
They have determined that their biggest internal exposure is employment issues as North
American companies function differently than those in Indonesia. On the external front, they
have circled political/regulatory risk as the biggest hurdle to a smooth operation. What are
two mitigation techniques that would help quell their concerns on having a smooth supply
chain management system to North America?
A. Diversify locations and diversify suppliers.
B. Consult with suppliers to e - correct answer-C
A phase in the life of a system when the basic purpose and preliminary design of the system
are formulated is the
A. Engineering phase.
B. Conceptual phase.
C. Deployment phase.
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