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CPCU 500 EXAM STUDY GUIDE Questions with 100- correct Answers A+ Guaranteed.
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CPCU 500 EXAM STUDY GUIDEQuestions with 100% correct Answers A+
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In the context of risk, the chance of being injured while driving to and from work, loading a
truck at work, moving furniture at home, or falling in an icy parking lot at the mall are all
examples of
A. Possibilities.
B. Uncertainties.
C. Probabilities.
D. Losses. correct answers A. Possibilities.
The statement, "There is a five percent chance that John will be injured in an automobile
accident while driving to work tomorrow," is an example of
A. Quantifying risk.
B. Verifying risk.
C. Quantifying loss exposures.
D. Identifying hazards. correct answers A. Quantifying risk.
Which one of the following is measurable and quantifies risk?
A. Probability
B. Possibility
C. Uncertainty
D. Feasibility correct answers A. Probability
One of the elements of risk is uncertainty. Which one of the following best describes the
uncertainty that risk involves?
A. Uncertainty as to how to manage potential losses
B. Uncertainty as to whether a negative outcome is possible
,C. Uncertainty as to the type and timing of an outcome
D. Uncertainty as to whether insurance is available correct answers C. Uncertainty as to the type
and timing of an outcome
Hardware Store has been able to control its prices and inventory since it has no competitors. A
new highway currently being constructed is going to allow increased competition for Hardware
Store. According to the quadrants of risk, this risk of increased competition falls into the
category of
A. Strategic risk.
B. Hazard risk.
C. Operational risk.
D. Financial risk. correct answers A. Strategic risk.
Company G is a manufacturer of high profile golf equipment. The risk management professional
for Company G is concerned about loss of business related to product design. Failing to respond
to changing customer demand and preferences in the design of golf clubs could cost Company G
significant market share. Categorized according to the quadrants of risk, this exposure to loss
would be classified as a(n)
A. Strategic risk.
B. Financial risk.
C. Operational risk.
D. Hazard risk. correct answers A. Strategic risk.
George has received an inheritance and is deciding what to do with the money. He has limited
his options to four choices: donate all the money to his favorite charity, use the entire inheritance
to buy a yacht, invest the inheritance in a small rental property, or use the entire amount to
purchase T-bills. Which one of the following statements is true regarding the risk involved in
George's options?
A. Donating his inheritance to charity is a pure risk; there is no uncertainty that the money will
be gone and George will have no chance of profit.
B. Buying a boat is a nondiversifiable risk because George can only afford to purchase a single
yacht.
,C. The rental property presents both pure and speculative risk; property values may increase, and
the building could burn down.
D. Purchasing T-bills is a pure risk because the interest rate payable is known, and the chance of
loss is minimal. correct answers C. The rental property presents both pure and speculative risk;
property values may increase, and the building could burn down.
Risk can be classified as pure or speculative. Which one of the following is the best example of a
speculative risk?
A. Acquiring a new television
B. Investing in shares of stock
C. Buying a new personal vehicle
D. Purchasing an insurance policy correct answers B. Investing in shares of stock
Which one of the following statements is true regarding enterprise risk management (ERM)?
A. ERM is concerned with an organization's pure risk, primarily hazard risk.
B. The ERM framework encompasses all stakeholders in the organization.
C. In ERM, the risk management function is the responsibility of the safety manager.
D. ERM requires less communication than traditional risk management. correct answers B. The
ERM framework encompasses all stakeholders in the organization.
A risk management plan that considers all of the risks that an organization faces, including
operational, financial, and strategic risks, is called
A. An enterprise risk management plan.
B. An open-perils risk management plan.
C. A protected cell risk management plan.
D. A hazard risk management plan. correct answers A. An enterprise risk management plan.
The single largest impediment to successful implementation of an enterprise risk management
(ERM) program is
Select one:
A. Traditional organizational culture with entrenched risk silos.
, B. Lack of required skills to effectively implement an ERM program.
C. Lack of vision by the management team that leads to under-performance of the ERM plan and
early termination.
D. Opposition from stakeholders—employees, stockholders, customers, and suppliers. correct
answers A. Traditional organizational culture with entrenched risk silos.
The consensus process by which the veracity of data is confirmed and verified is known as
Select one:
A. Telematics.
B. Machine learning.
C. The Internet of Things.
D. Mining. correct answers D. Mining.
Which one of the following is a virtual ledger of data that has been verified, timestamped,
encrypted, and protected against tampering?
Select one:
A. Artificial intelligence
B. The Internet of Things
C. Closed-loop system
D. Blockchain correct answers D. Blockchain
Which one of the following is the network through which sensors and other smart products
capture and transmit data?
Select one:
A. Blockchain
B. Cloud
C. Artificial intelligence
D. Internet of Things correct answers D. Internet of Things
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