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Exam (elaborations)

RMIN 4000 Exam Questions and Answers 100% Verified.

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RMIN 4000 Exam Questions and Answers 100- Verified.

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  • October 31, 2024
  • 7
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • RMIN 4000
  • RMIN 4000
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Wisdoms
RMIN 4000 Exam Questions and Answers 100%
Verified




Risk - (correct answer) -Uncertainty concerning the occurrence of a loss
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Loss exposure - (correct answer) -any situation or circumstance in which a loss might occur (regardless
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of if it happens or not)
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- ex: When we think about if we might get sick.. my body is the exposure. If I have a business and 10
io io io io io io io io io io io io io io io io io io io io io io




buildings.. My buildings are exposures.
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Objective risk - (correct answer) -relative variation of actual loss from expected loss.
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Law of large numbers - (correct answer) -as the # of exposures increases the more closely the actual
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loss will get to the expected.
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Pure risk - (correct answer) -there's no up-side to the risk (nothing good comes from it), chance of loss
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or chance of no loss
io io io io io




Speculative risk - (correct answer) -There is a chance for a win or a gain, you're creating a risk.
io io io io io io io io io io io io io io io io io io




Ex: golden balls (split or steal) or gambling or buying a house - when we go to sell it, there could be a
io io io io io io io io io io io io io io io io io io io io io io




gain or a sell.
io io io io




Subjective risk - (correct answer) -uncertainity based on a person's mental condition or state of mind.
io io io io io io io io io io io io io io io




How we feel about the loss.
io io io io io io




Ex:$500 is different for a poor person and a rich person
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- sister's afraid of water and atkinson is afraid of ziplining
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- the risks are the same, but affects them differently (different way of handling it)
io io io io io io io io io io io io io io




Chance of loss - (correct answer) -the probability that an event will occur
io io io io io io io io io io io io




Objective probability - (correct answer) -the long-run relative frequency of an event based on the
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assumptions of an infinite # of observations and no change in underlying conditions
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Subjective probability - (correct answer) -the individual's personal estimate of the chance of loss.
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, Ex: sending annthrax in the mail.
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- this cost companies a lot of money, when in reality only 5 letters were actually sent with annthrax in
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them. - so this probably wasn't a huge risk, but it was in light of 9/11
io io io io io io io io io io io io io io io io




Risk Averse - (correct answer) -Avoid Risk if and when possible. Will pay extra to remove risk from a
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set of outcomes.
io io io




Risk is scary io io




Risk Seeker / Taker - (correct answer) -Enjoys risk. Will "gamble" on a big payout and not take many
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precautions (would not pay anywhere close to expected loss) to avoid risk.
io io io io io io io io io io io io




Risk Tolerant / Risk Neutral - (correct answer) -- Risk is just right. Will evaluate risk and will strive to
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"pay" no more or less than the expected loss to avoid the risk.
io io io io io io io io io io io io io




- The value of risky situation is the expected loss
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Peril - (correct answer) -the cause of loss
io io io io io io io




Hazard - (correct answer) -a condition that creates or increases the frequency or severity of loss.
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4 main types: physical, moral, attitudinal, legal
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Physical hazard - (correct answer) -- physical condition that increases the frequency or severity of loss
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- ex: icy roads, defective wiring
io io io io io




Moral Hazard - (correct answer) -- dishonesty or character defects in an individual that increases the
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frequency or severity of loss
io io io io io




- ex: insurance fraud, burning down own house to collect
io io io io io io io io io




Morale hazard - (correct answer) -- carelessness or indifference to a loss, which increases the
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frequency or severity of loss
io io io io io




- ex: leaving keys in unlocked car, leaving door unlocked
io io io io io io io io io




Legal hazard - (correct answer) -- characteristics of legal system or regulatory environment that
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increase the frequency or severity of loss
io io io io io io io




- ex: large damage rewards in liability lawsuits
io io io io io io io




Particular/Diversifiable Risk - (correct answer) -A risk that affects only individuals as individuals. io io io io io io io io io io io io




Fundamental/Systematic/Non-diversifiable Risk - (correct answer) -Risk that affects a large number of io io io io io io io io io io io




individuals or the entire economy.
io io io io io

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