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RMI 4115 Exam 2 Study Guide Questions with correct answers
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RMI 4115 Exam 2 Study Guide Questions with correct answers
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RMI 4115 Exam 2 Study Guide Questions with correctanswers
1) John retired five years ago. This year, his medical expenses are larger
than he expected. If he purchases additional private health insurance,
this is an example of...
Risk reduction
Loss reduction
Risk transfer
Avoidance Correct Answer-Risk Transfer
2) When it comes to the management of risk in the future financial
payments associated with health shocks, which of the following is the
peril?
Purchase of health insurance
Death caused by cancer
Visiting doctor's office for medical conditions
Genetic immunization problem
Not exercising regularly Correct Answer-Visiting doctor's office for
medical conditions
3) Without health insurance, an adverse event such as an auto accident at
age 35 will most likely __________ compared to a case I had insurance.
reduce my discretionary consumption
reduce the amount of my financial capital today
increase the amount of my retirement annuity
,increase my gross human capital Correct Answer-Reduce my
discretionary consumption
4) Whether one retains the risk or transfers the risk, both are considered
an example of:
Risk avoidance
Risk control
Risk financing
Risk classification Correct Answer-Risk Financing
5) When we assume you have no bequest motives, it suggests that:
You never die
Your financial capital at the time of death is zero
Your gross human capital is higher than your implicit liabilities
Your gross human capital decreases over time Correct Answer-Your
financial capital at the time of death is zero
6) When we assume we have a zero patience parameter under the
consumption smoothing framework, this means:
We borrow from banks to spend more today
We prefer to save more today to spend more later
We lend money to others to increase social welfare
We plan to have a smooth discretionary consumption pattern
None of the above are the implications Correct Answer-We plan to have
a smooth discretionary consumption pattern
, 7) Under the consumption smoothing framework, any of the below
assumption is possible except:
An increase in discretionary consumption growth rate
An increase in salary growth rate
An abrupt change in discretionary consumption
An abrupt change in salary Correct Answer-An abrupt change in
discretionary consumption
8) Which of the following is true about the consumption smoothing
framework?
People with negative patience parameter have to borrow from friends
People with positive patience parameter are willing to save less today
than tomorrow
People with zero patience parameter spend constant amounts of
discretionary consumption
All of the above Correct Answer-People with zero patience parameter
spend constant amounts of discretionary consumption
9) If Mandy's patience parameter for discretionary consumption is 0.03
and it is -0.05 for Dean, which of the following is true under the
consumption smoothing framework, everything else equal?
Mandy is willing to wait to consume more later
Dean is willing to wait to consume more later
Mandy is going to retire earlier than Dean
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