RMIN 4000 Test 1 Brown UGA UPDATED ACTUAL Questions and CORRECT Answers
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Course
RMIN 4000
Institution
RMIN 4000
RMIN 4000 Test 1 Brown UGA UPDATED
ACTUAL Questions and CORRECT
Answers
Exposures - CORRECT ANSWER- things of value (assets) that could be lost
Perils - CORRECT ANSWER- things that cause injury or loss
risk - CORRECT ANSWER- a calculated possibility of a negative outcome
Frequency - CORRECT...
RMIN 4000 Test 1 Brown UGA UPDATED
ACTUAL Questions and CORRECT
Answers
Exposures - CORRECT ANSWER- ✔✔things of value (assets) that could be lost
Perils - CORRECT ANSWER- ✔✔things that cause injury or loss
risk - CORRECT ANSWER- ✔✔a calculated possibility of a negative outcome
Frequency - CORRECT ANSWER- ✔✔the number of losses (such as fire or theft) that occur
within a specified time period. aka the probability of a loss
Severity - CORRECT ANSWER- ✔✔the dollar amount of a loss for a specific peril (fire,
theft, collision) aka How much does it cost when the loss does occur?
Hazard - CORRECT ANSWER- ✔✔a condition that creates or increases the frequency or
severity of loss but does NOT cause the loss.
Physical Hazard - CORRECT ANSWER- ✔✔a physical condition that increases the
frequency or severity of loss
Moral Hazard - CORRECT ANSWER- ✔✔the presence of insurance changes the behavior of
the insured. ex: making hail damage to get a check
Morale hazard (attitudinal hazard) - CORRECT ANSWER- ✔✔A condition of carelessness
or indifference that increases the frequency or severity of loss.
Legal Hazard - CORRECT ANSWER- ✔✔characteristics of the legal system or regulatory
environment that increase the frequency or severity of losses
, Georgia's Diminution in value is an example of a - CORRECT ANSWER- ✔✔legal hazard
because it increases the severity on property losses
Pure Risk - CORRECT ANSWER- ✔✔A chance of loss or no loss, but no chance of gain.
Insurance can be bought for this
Speculative Risk - CORRECT ANSWER- ✔✔A chance of loss, no loss, or gain.
Diversifiable risk - CORRECT ANSWER- ✔✔a risk that affects only individuals or small
groups and not the entire economy. It can be eliminated/ reduced through diversification. the
risks are not correlated
Developing cancer or your house being caught on fire are two examples of what kind of risk?
- CORRECT ANSWER- ✔✔Pure Risk
diversifiable risk - CORRECT ANSWER- ✔✔A risk that affects only some individuals,
businesses, or small groups. they can be reduced/eliminated through diversification. the risks
are not correlated
Non-Diversifiable Risk - CORRECT ANSWER- ✔✔affects the entire economy or large
numbers of persons or groups within the economy (hurricane, flood), risks are correlated
(inflation, unemployment) cannot be eliminated through diversification
Enterprise Risk - CORRECT ANSWER- ✔✔encompasses all major risks faced by a business
firm, which include: pure risk, speculative risk, strategic risk, operational risk, and financial
risk
systemic risk - CORRECT ANSWER- ✔✔the risk that the failure of one financial institution
can bring down other institutions as well. instability in the financial system due to the
interdependency between the players in the market
Types of Pure Risk - CORRECT ANSWER- ✔✔personal risks, property risks, liability risks,
loss of business income, cyber-security risks
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