Exam (elaborations)
CPCU 500 CHP. 6 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CPCU 500 CHP. 6 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CPCU 500 CHP. 6 QUESTIONS ANDANSWERS WITH SOLUTIONS 2024
uncorrelated - ANSWER Pooling arrangements function best when the loss exposures being pooled are
_____ with one another (correlated/uncorrelated)
decreases - ANSWER As members in a pool increase, std. deviation on a per member basis
(increases/decreases)
standard deviation - ANSWER measures the uncertainty around the expected value
decreases - ANSWER By pooling, the expected value remains the same, but the uncertainty around that
expected value (increases/decreases
consistent, variable - ANSWER Pooling does not change either person's expected cost, but it makes the
actual cost more ______ and less ____, therefore reducing risk
sharing, transfer - ANSWER Pooling is a risk ______ mechanism, while insurance is a risk ___ mechanism
initial capital from investors and retained earnings - ANSWER two sources of financial resources that
enable insurance companies to stronger guarantee the sufficient funds will be available in the event of a
loss
Pure risk, Fortuitous losses, Affordable, Large, Independent, Definite - ANSWER 6 characteristics of
ideally insurable loss exposures (PFALID)
fortuitous - ANSWER a loss that is accidental and unexpected can be describes as
catastrophic and location - ANSWER Winstorm and flood meet all ideal insurable characteristics except
they can be _____ and everything else depends on _____
Property, liability, personel, net income - ANSWER 4 categories of loss exposures
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