CPCU 500 - Full Exam with verified detailed solutions
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In order to achieve collaboration, group leaders must
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A. Remain focused on achieving the goals of their individual groups.
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B. Focus on the worker's personality rather than results.
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C. Remain focused on preventing stakeholders from straying from the common goal.
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D. Promote competition among members of the group. - ✔✔C. Remain focused on
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preventing stakeholders from straying from the common goal.
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Which of the following risk management program goals is an essential goal for all public
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entities?
A. Survival
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B. Continuity of operations
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C. Growth
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D. Earning stability - ✔✔B. Continuity of operations
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Which one of the following is described as a distributed database that serves as a
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collectively shared ledger? || ||
A. Telematics
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B. Big data
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C. Blockchain
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D. The Internet of Things - ✔✔C. Blockchain
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,The original cost of a property is known as the
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A. Replacement cost.
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B. Historical cost.
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C. Market value.
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D. Tax-appraised value. - ✔✔B. Historical cost.
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Which one of the following statements is true if earnings at risk are $200,000 with 90%
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confidence?
A. Earnings at risk are projected to be $180,000.
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B. Earnings at risk are projected to be less than $200,000 10% of the time.
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C. Earnings at risk are projected to be $200,000 90% of the time.
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D. Earnings at risk are projected to be greater than $200,000 10% of the time. - ✔✔B.
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Earnings at risk are projected to be less than $200,000 10% of the time.
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Which one of the following statements is true regarding event tree analysis?
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A. Event tree analysis can be used to select the most effective strategy to achieve a goal.
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B. Event tree analysis provides only quantitative information.
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C. Event tree analysis provides only qualitative information.
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D. Event tree analysis typically provides only two options, success or failure. - ✔✔D. Event
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tree analysis typically provides only two options, success or failure.
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Regression analysis assumes that || || ||
A. The variable being forecast varies predictably with another variable.
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,B. Dependent variables are unaffected by independent variables.
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C. For any given past year, the projected trend value will be the same as the actual outcome.
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D. The linear regression line is more accurate the further it gets from the actual data values
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used. - ✔✔A. The variable being forecast varies predictably with another variable.
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Taylor owns Paoli Hardware, a mid-sized hardware store with 25 employees. Paoli
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Hardware has won best local hardware store 3 years in a row. Taylor would like to expand
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operations and has undertaken a SWOT analysis. || || || || || ||
His most dedicated customers are generally over 40 years old and engaged in small house
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projects, but his biggest revenue generator continues to be the sale of lumber. He would like
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to obtain more commercial customers and increase lumber sales.
|| || || || || || || ||
One of the major complaints Taylor hears from his customers is the difficulty finding local
|| || || || || || || || || || || || || || ||
contractors. So, he is considering hiring a general contractor at the store who would also
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make house calls to assist customers. This will allow him to bill for labor and increase the
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sale of his products, but he is concerned it may increase his insurance claims and
|| || || || || || || || || || || || || || ||
premiums.
One of the younger store employees suggested they create a website to expand sales to on-
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line purcha - ✔✔d. Technological advancements
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The level of confidence an organization places in the organization's risk management
|| || || || || || || || || || || ||
culture, practices, and procedures is called || || || || ||
A. Risk tolerance.
|| ||
B. Tolerable uncertainty.
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C. Risk assurance.
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D. Probable maximum loss. - ✔✔C. Risk assurance.
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The process of comparing the key risk indicators of an organization with those of other
|| || || || || || || || || || || || || || ||
organizations in the same industry is known as || || || || || || ||
, A. Hedging.
||
B. Benchmarking.
||
C. Trend analysis.
|| ||
D. Root cause analysis. - ✔✔B. Benchmarking.
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An organization has had a high percentage of repetitive stress injuries to workers in a
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particular phase of their production process. The risk manager has been asked to analyze
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these injuries from a system safety analysis perspective. Which one of the following
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techniques should the risk manager use to investigate these accidents?
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A. Failure mode and effects analysis
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B. Job safety analysis
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C. Future states analysis
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D. Strategy analysis - ✔✔B. Job safety analysis
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An organization can use securitization to exchange
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A. Cash for income-producing assets.
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B. Debt for income-producing assets.
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C. Income-producing assets for cash.
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D. Liabilities for mortgage receivables. - ✔✔C. Income-producing assets for cash
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Which one of the following best explains how most smart products potentially improve risk
|| || || || || || || || || || || || || ||
management?
A. They assess risks in dangerous areas.
|| || || || || ||
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In order to achieve collaboration, group leaders must
|| || || || || || ||
A. Remain focused on achieving the goals of their individual groups.
|| || || || || || || || || ||
B. Focus on the worker's personality rather than results.
|| || || || || || || ||
C. Remain focused on preventing stakeholders from straying from the common goal.
|| || || || || || || || || || ||
D. Promote competition among members of the group. - ✔✔C. Remain focused on
|| || || || || || || || || || || || ||
preventing stakeholders from straying from the common goal.
|| || || || || || ||
Which of the following risk management program goals is an essential goal for all public
|| || || || || || || || || || || || || || ||
entities?
A. Survival
||
B. Continuity of operations
|| || ||
C. Growth
||
D. Earning stability - ✔✔B. Continuity of operations
|| || || || || || ||
Which one of the following is described as a distributed database that serves as a
|| || || || || || || || || || || || || || ||
collectively shared ledger? || ||
A. Telematics
||
B. Big data
|| ||
C. Blockchain
||
D. The Internet of Things - ✔✔C. Blockchain
|| || || || || || ||
,The original cost of a property is known as the
|| || || || || || || || ||
A. Replacement cost.
|| ||
B. Historical cost.
|| ||
C. Market value.
|| ||
D. Tax-appraised value. - ✔✔B. Historical cost.
|| || || || || ||
Which one of the following statements is true if earnings at risk are $200,000 with 90%
|| || || || || || || || || || || || || || || ||
confidence?
A. Earnings at risk are projected to be $180,000.
|| || || || || || || ||
B. Earnings at risk are projected to be less than $200,000 10% of the time.
|| || || || || || || || || || || || || ||
C. Earnings at risk are projected to be $200,000 90% of the time.
|| || || || || || || || || || || ||
D. Earnings at risk are projected to be greater than $200,000 10% of the time. - ✔✔B.
|| || || || || || || || || || || || || || || || ||
Earnings at risk are projected to be less than $200,000 10% of the time.
|| || || || || || || || || || || || ||
Which one of the following statements is true regarding event tree analysis?
|| || || || || || || || || || ||
A. Event tree analysis can be used to select the most effective strategy to achieve a goal.
|| || || || || || || || || || || || || || || ||
B. Event tree analysis provides only quantitative information.
|| || || || || || ||
C. Event tree analysis provides only qualitative information.
|| || || || || || ||
D. Event tree analysis typically provides only two options, success or failure. - ✔✔D. Event
|| || || || || || || || || || || || || || ||
tree analysis typically provides only two options, success or failure.
|| || || || || || || || ||
Regression analysis assumes that || || ||
A. The variable being forecast varies predictably with another variable.
|| || || || || || || || ||
,B. Dependent variables are unaffected by independent variables.
|| || || || || || ||
C. For any given past year, the projected trend value will be the same as the actual outcome.
|| || || || || || || || || || || || || || || || ||
D. The linear regression line is more accurate the further it gets from the actual data values
|| || || || || || || || || || || || || || || || ||
used. - ✔✔A. The variable being forecast varies predictably with another variable.
|| || || || || || || || || || ||
Taylor owns Paoli Hardware, a mid-sized hardware store with 25 employees. Paoli
|| || || || || || || || || || || ||
Hardware has won best local hardware store 3 years in a row. Taylor would like to expand
|| || || || || || || || || || || || || || || || ||
operations and has undertaken a SWOT analysis. || || || || || ||
His most dedicated customers are generally over 40 years old and engaged in small house
|| || || || || || || || || || || || || || ||
projects, but his biggest revenue generator continues to be the sale of lumber. He would like
|| || || || || || || || || || || || || || || ||
to obtain more commercial customers and increase lumber sales.
|| || || || || || || ||
One of the major complaints Taylor hears from his customers is the difficulty finding local
|| || || || || || || || || || || || || || ||
contractors. So, he is considering hiring a general contractor at the store who would also
|| || || || || || || || || || || || || || ||
make house calls to assist customers. This will allow him to bill for labor and increase the
|| || || || || || || || || || || || || || || || ||
sale of his products, but he is concerned it may increase his insurance claims and
|| || || || || || || || || || || || || || ||
premiums.
One of the younger store employees suggested they create a website to expand sales to on-
|| || || || || || || || || || || || || || ||
line purcha - ✔✔d. Technological advancements
|| || || || ||
The level of confidence an organization places in the organization's risk management
|| || || || || || || || || || || ||
culture, practices, and procedures is called || || || || ||
A. Risk tolerance.
|| ||
B. Tolerable uncertainty.
|| ||
C. Risk assurance.
|| ||
D. Probable maximum loss. - ✔✔C. Risk assurance.
|| || || || || || ||
The process of comparing the key risk indicators of an organization with those of other
|| || || || || || || || || || || || || || ||
organizations in the same industry is known as || || || || || || ||
, A. Hedging.
||
B. Benchmarking.
||
C. Trend analysis.
|| ||
D. Root cause analysis. - ✔✔B. Benchmarking.
|| || || || || ||
An organization has had a high percentage of repetitive stress injuries to workers in a
|| || || || || || || || || || || || || || ||
particular phase of their production process. The risk manager has been asked to analyze
|| || || || || || || || || || || || || ||
these injuries from a system safety analysis perspective. Which one of the following
|| || || || || || || || || || || || ||
techniques should the risk manager use to investigate these accidents?
|| || || || || || || || ||
A. Failure mode and effects analysis
|| || || || ||
B. Job safety analysis
|| || ||
C. Future states analysis
|| || ||
D. Strategy analysis - ✔✔B. Job safety analysis
|| || || || || || ||
An organization can use securitization to exchange
|| || || || || ||
A. Cash for income-producing assets.
|| || || ||
B. Debt for income-producing assets.
|| || || ||
C. Income-producing assets for cash.
|| || || ||
D. Liabilities for mortgage receivables. - ✔✔C. Income-producing assets for cash
|| || || || || || || || || ||
Which one of the following best explains how most smart products potentially improve risk
|| || || || || || || || || || || || || ||
management?
A. They assess risks in dangerous areas.
|| || || || || ||
