All of the following are considered financial risks EXCEPT (Points : 1)

All of the following are considered financial risks EXCEPT (Points : 1)

All of the following are considered financial risks EXCEPT (Points : 1)

Subject: Business / Finance
1.All of the following are considered financial risks EXCEPT (Points : 1)

increased cost of production because of rising commodity prices.

the decline in the value of a bond portfolio because of rising interest rates.

loss of money because of adverse movements in currency exchange rates.

destruction of a production facility caused by an explosion.

Question 2.

2.Which of the following is least likely to occur during a “hard” insurance market period? (Points : 1)

difficulty in obtaining insurance

increasing premiums

higher insurer profits

tightening underwriting standards

Question 3.

3.Uncertainty based on a person’s mental condition or state of mind is known as (Points : 1)

objective risk.

objective probability.

subjective risk.

subjective probability.

Question 4.

4.Ben is concerned that if he injures someone or damages someone’s property he could be held legally responsible and required to pay damages. This type of risk is called a: (Points : 1)

nondiversifiable risk

liability risk

property risk

speculative risk

Question 5.

5.Which of the following statements about an excess insurance plan is true? (Points : 1)

Losses in excess of a specified amount are not covered.

The insurer pays first up to some specified level; the insured then pays all losses exceeding the insurer’s retention level.

The insured and insurer share equally in any loss that occurs.

The insurer does not participate in a loss until it exceeds the amount the firm has decided to retain.

Question 6.

6.Brenda identified all of the pure loss exposures her family faces. Then she analyzed these loss exposures, developed a plan to treat these risks, and implemented the plan. The process Brenda conducted is called (Points : 1)

personal financial planning.

personal risk management.

personal estate planning.

personal insurance programming.

Question 7.

7.Preloss objectives of risk management include which of the following?

I. Preparing for potential losses in the most economical way.

II. Reduction of anxiety. (Points : 1)

I only

II only

both I and II

neither I nor II

Question 8.

8.The long-run relative frequency of an event based on the assumption of an infinite number of observations with no change in the underlying conditions is called (Points : 1)