RMI 211 EXAM 1 – Meek Study Guide with Complete Solutions
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Course
RMI 211
Institution
RMI 211
RMI 211 EXAM 1 – Meek Study Guide
with Complete Solutions
uncertainty concerning the occurrence of a loss - Answer️️ -Risk
the property or life that is being considered for insurance - Answer️️ -
Insurance form of risk
any situation or circumstance in which a loss is possible, regard...
RMI 211 EXAM 1 – Meek Study Guide
with Complete Solutions
uncertainty concerning the occurrence of a loss - Answer✔️✔️-Risk
the property or life that is being considered for insurance - Answer✔️✔️-
Insurance form of risk
any situation or circumstance in which a loss is possible, regardless of
whether a loss occurs - Answer✔️✔️-Loss exposure
the relative variation of actual loss from expected loss - Answer✔️✔️-
Objective risk
uncertainty based on a person's mental condition or state of mind -
Answer✔️✔️-Subjective (perceived) risk
the probability that an event will occur; can be same for two outcomes but
may have different objective risks - Answer✔️✔️-Chance of loss
refers to the long-run relative frequency of an event based on the
assumptions of an infinite number of observations and of no change in the
underlying conditions - Answer✔️✔️-Objective probability
the individual's personal estimate of a chance of loss - Answer✔️✔️-
Subjective probability
the cause of a loss - Answer✔️✔️-Peril
a condition that increases the chance of loss - Answer✔️✔️-Hazard
a physical condition that increases the frequency or severity of a loss -
Answer✔️✔️-Physical hazard
dishonesty or character defects in an individual that increases the
frequency or severity of a loss - Answer✔️✔️-Moral hazard
carelessness or indifference to a loss, which increases the frequency or
severity of a loss - Answer✔️✔️-Attitudinal hazard
refers to characteristics of the legal system or regulatory environment that
increase the frequency or severity of losses - Answer✔️✔️-Legal hazard
a situation in which there are only the possibilities of loss or no loss
(earthquake) - Answer✔️✔️-Pure risk
a situation in which either profit or loss is possible (gambling) -
Answer✔️✔️-Speculative risk
affects only individuals or small groups; can be reduced or eliminated by
diversification (car theft) - Answer✔️✔️-Diversifiable risk
affects the entire economy or large numbers of persons or groups within an
economy; also called a fundamental risk (hurricane) - Answer✔️✔️-Non-
diversifiable risk
encompasses all major risks faced by a business firm, which include: pure,
speculative, strategic, operational, and financial risk - Answer✔️✔️-
Enterprise risk
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