CPCU 500 3rd Edition Final exam 1 with accurate detailed || || || || || || || || || ||
answers
Risk involves the possibility of a negative outcome. Possibility means - ✔✔That an outcome
|| || || || || || || || || || || || || ||
may or may not occur.
|| || || ||
Risk can be classified as subjective or objective. Which one of the following statements is
|| || || || || || || || || || || || || || ||
correct with respect to these risk classifications? - ✔✔Subjective risk can exist even where
|| || || || || || || || || || || || || ||
objective risk does not. || || ||
The concept of correlation, in the context of why enterprise risk management works, -
|| || || || || || || || || || || || || ||
✔✔Is the proposition that correlation increases risk while uncorrelated risks can reduce
|| || || || || || || || || || || ||
risk
The use of data gleaned from sensors to react immediately to hazardous situations is known
|| || || || || || || || || || || || || ||
as - ✔✔Real-time risk management.
|| || || || ||
Delmond Manufacturing is opening a new manufacturing facility in a building that it
|| || || || || || || || || || || || ||
purchased from a competitor. Using the information below, which one of the following
|| || || || || || || || || || || || ||
represents the cost of risk of opening the new facility? || || || || || || || || ||
New building cost $60.0 million Safety system upgrades $6.0 million Insurance premiums
|| || || || || || || || || || || ||
$1.5 million ||
Retained losses $3.0 million || || ||
Risk management department budget at the site $1.0 million - ✔✔$11.5 million
|| || || || || || || || || || ||
An organization must meet the standard of care that it owes to others in order to ensure
|| || || || || || || || || || || || || || || || ||
that - ✔✔Legal obligations are satisfied
|| || || || ||
, A risk management program must be monitored and periodically revised, and that revision
|| || || || || || || || || || || || ||
involves four steps. Which one of the following is one of those four steps? - ✔✔Compare
|| || || || || || || || || || || || || || || ||
actual results with the established performance standards.
|| || || || || ||
Property insurance policies not only protect the property owner but also generally protect a
|| || || || || || || || || || || || || ||
secured lender's interest in the financed property by - ✔✔Naming the lender on the owner's
|| || || || || || || || || || || || || ||
policy.
||
Perils are an important aspect of property insurance. Which one of the following statements
|| || || || || || || || || || || || || ||
is correct with respect to perils? - ✔✔A peril is the actual means by which property is
|| || || || || || || || || || || || || || || || ||
damaged or destroyed such as fire, lightning, windstorm, hail, or theft.
|| || || || || || || || || ||
A building contractor uses lower grade materials than called for in the specifications for an
|| || || || || || || || || || || || || || ||
office building. A year after the building was completed, a balcony collapses, injuring
|| || || || || || || || || || || || ||
several employees and customers and causing damage to the building and contents. For the
|| || || || || || || || || || || || || ||
building construction company, this is an example of - ✔✔A completed operations liability
|| || || || || || || || || || || || ||
exposure.
Josephine Redmond who is the sole proprietor of Dream Quilts, Inc., operates out of three
|| || || || || || || || || || || || || || ||
branch offices with 17 employees. What happens to Josephine's business if she dies or
|| || || || || || || || || || || || || ||
retires? - ✔✔The business ceases to exist || || || || || ||
An auto dealer's showroom is destroyed by fire, and the dealer has to temporarily rent an
|| || || || || || || || || || || || || || || ||
adjacent building to use as a showroom. This is an example of - ✔✔An extra expense
|| || || || || || || || || || || || || || ||
Which one of the following is correct with respect to compliance reviews? - ✔✔Monitoring
|| || || || || || || || || || || || || ||
and maintaining compliance through compliance reviews can prevent significant losses that
|| || || || || || || || || ||
the organization would otherwise incur.
|| || || || ||
In order to avoid underestimating or overestimating loss projections, historical loss data
|| || || || || || || || || || || ||
must be expressed in - ✔✔Constant dollars.
|| || || || || ||
answers
Risk involves the possibility of a negative outcome. Possibility means - ✔✔That an outcome
|| || || || || || || || || || || || || ||
may or may not occur.
|| || || ||
Risk can be classified as subjective or objective. Which one of the following statements is
|| || || || || || || || || || || || || || ||
correct with respect to these risk classifications? - ✔✔Subjective risk can exist even where
|| || || || || || || || || || || || || ||
objective risk does not. || || ||
The concept of correlation, in the context of why enterprise risk management works, -
|| || || || || || || || || || || || || ||
✔✔Is the proposition that correlation increases risk while uncorrelated risks can reduce
|| || || || || || || || || || || ||
risk
The use of data gleaned from sensors to react immediately to hazardous situations is known
|| || || || || || || || || || || || || ||
as - ✔✔Real-time risk management.
|| || || || ||
Delmond Manufacturing is opening a new manufacturing facility in a building that it
|| || || || || || || || || || || || ||
purchased from a competitor. Using the information below, which one of the following
|| || || || || || || || || || || || ||
represents the cost of risk of opening the new facility? || || || || || || || || ||
New building cost $60.0 million Safety system upgrades $6.0 million Insurance premiums
|| || || || || || || || || || || ||
$1.5 million ||
Retained losses $3.0 million || || ||
Risk management department budget at the site $1.0 million - ✔✔$11.5 million
|| || || || || || || || || || ||
An organization must meet the standard of care that it owes to others in order to ensure
|| || || || || || || || || || || || || || || || ||
that - ✔✔Legal obligations are satisfied
|| || || || ||
, A risk management program must be monitored and periodically revised, and that revision
|| || || || || || || || || || || || ||
involves four steps. Which one of the following is one of those four steps? - ✔✔Compare
|| || || || || || || || || || || || || || || ||
actual results with the established performance standards.
|| || || || || ||
Property insurance policies not only protect the property owner but also generally protect a
|| || || || || || || || || || || || || ||
secured lender's interest in the financed property by - ✔✔Naming the lender on the owner's
|| || || || || || || || || || || || || ||
policy.
||
Perils are an important aspect of property insurance. Which one of the following statements
|| || || || || || || || || || || || || ||
is correct with respect to perils? - ✔✔A peril is the actual means by which property is
|| || || || || || || || || || || || || || || || ||
damaged or destroyed such as fire, lightning, windstorm, hail, or theft.
|| || || || || || || || || ||
A building contractor uses lower grade materials than called for in the specifications for an
|| || || || || || || || || || || || || || ||
office building. A year after the building was completed, a balcony collapses, injuring
|| || || || || || || || || || || || ||
several employees and customers and causing damage to the building and contents. For the
|| || || || || || || || || || || || || ||
building construction company, this is an example of - ✔✔A completed operations liability
|| || || || || || || || || || || || ||
exposure.
Josephine Redmond who is the sole proprietor of Dream Quilts, Inc., operates out of three
|| || || || || || || || || || || || || || ||
branch offices with 17 employees. What happens to Josephine's business if she dies or
|| || || || || || || || || || || || || ||
retires? - ✔✔The business ceases to exist || || || || || ||
An auto dealer's showroom is destroyed by fire, and the dealer has to temporarily rent an
|| || || || || || || || || || || || || || || ||
adjacent building to use as a showroom. This is an example of - ✔✔An extra expense
|| || || || || || || || || || || || || || ||
Which one of the following is correct with respect to compliance reviews? - ✔✔Monitoring
|| || || || || || || || || || || || || ||
and maintaining compliance through compliance reviews can prevent significant losses that
|| || || || || || || || || ||
the organization would otherwise incur.
|| || || || ||
In order to avoid underestimating or overestimating loss projections, historical loss data
|| || || || || || || || || || || ||
must be expressed in - ✔✔Constant dollars.
|| || || || || ||
