ARM 402 LATEST 2026 TEST PAPER QUESTIONS AND
SOLUTIONS RATED A+
✔✔The major difference between a traditional experience rated insurance plan and a
retrospectively rated insurance plan is
A. The coverage limits available under each type of plan.
B. The period of loss experience that is used to adjust the premium.
C. Whether state premium taxes are levied on the premium for the coverage.
D. Which party, the insurer or the insured, provides loss adjustment services. - ✔✔B
✔✔When negotiating noninsurance risk transfer terms, risk management professionals
should consider the
A. Reduction in insurer risk charges and premium taxes that might result.
B. Legal enforceability of contract provisions.
C. Effect on the organization's relationship with its insurance broker.
D. Effect on the organization's insurance program. - ✔✔B
✔✔The characteristics of a captive insurer
A. Rarely involve the purchase reinsurance.
B. Normally cover only first-party losses.
C. Do not involve policy issuance.
D. Normally involve both retention and transfer. - ✔✔D
✔✔In the United States, the formation and operation of workers compensation pools are
regulated by the
A. National Council on Compensation Insurance (NCCI).
B. Individual states.
C. Occupational Safety and Health Act (OSHA).
D. Individual industries. - ✔✔B
✔✔One characteristic of captive insurance plans is that
A. Losses are rarely funded because of the operation of captives.
B. Administrative requirements are low because of the relationship between the owner
and captive.
C. The severity of losses transferred to captives is generally low to medium.
D. They typically require no retention. - ✔✔C
✔✔Hold-harmless agreements are
A. Enforceable without legal consideration.
B. Comprised of two parties—the indemnitor and the indemnitee.
C. Highly regulated.
D. Standardized. - ✔✔B
✔✔A retrospective rating plan
,A. Bases pricing on past loss experience.
B. Is a form of self-insurance.
C. Is considered to be guaranteed-cost insurance.
D. Is insurance that is subject to a rating formula. - ✔✔D
✔✔Which one of the following is true regarding patents?
A. Patents do not expire.
B. Plant patents are granted on biologically asexually reproducing plants.
C. Patent applications must show each user's name.
D. International standards apply to patents. - ✔✔B
✔✔A patent issued for an invention or process that has some usefulness, does not
have to be marketable, but must work is a
A. Process patent.
B. Design patent.
C. Plant patent.
D. Utility patent. - ✔✔D
✔✔The type of patent most appropriate for an invention or a process that has some
usefulness is a
A. Plant patent.
B. Service patent.
C. Utility patent.
D. Design patent. - ✔✔C
✔✔Betty has invented a new device that reduces the time it takes to backup computer
data by 90 percent. She believes this will be of interest to several major computer and
data manufacturers. Betty should protect her invention with a
A. Servicemark.
B. Copyright.
C. Trademark.
D. Patent. - ✔✔D
✔✔The duration of a patent right varies depending on the type of patent. Which one of
the following patents last for 14 years from the date of issuance?
A. Design patent
B. Plant patent
C. Process patent
D. Utility patent - ✔✔A
✔✔Brooks Irrigation Services has designed plans for a new lawn sprinkler system. In
order to safeguard their document and control infringement exposures, they have
placed the notation © 2012 Brooks Irrigation Services on their published plans. This is
known as a copyright
A. Restrictive covenant.
,B. Laches.
C. Registration.
D. Notice. - ✔✔D
✔✔Copyrights are generally owned by the person (author) who created the work,
except when the work
A. Has not been registered with the U.S. Copyright Office.
B. Was jointly prepared by two or more authors.
C. Was created in a reproducible medium such as video or audio tape.
D. Was created in the course of the author's employment. - ✔✔D
✔✔The product of human intelligence that has economic value defines
A. Trade secret.
B. Infringement.
C. Copyright.
D. Intellectual property. - ✔✔D
✔✔Which one of the following criteria must a creative work meet to be eligible for
copyright protection?
A. The work must be created in the course of the individual's employment.
B. The work must be created on commission.
C. The work must not be reproducible.
D. The work must be original. - ✔✔D
✔✔Which one of the following is a risk control measure that can be applied to copyright
infringement?
A. Unrestrictive covenants
B. Duplication
C. Registration
D. Insurance - ✔✔C
✔✔Hadley Computer Manufacturing is being sued by another computer manufacturer
because Hadley's logo is written in such a way that it confuses consumers regarding
which manufacturer is the creator of the product. This is an example of an infringement
of
A. Patent.
B. Servicemark.
C. Trademark.
D. Copyright. - ✔✔C
✔✔The way that an organization differentiates its services from its competitors services
is a
A. Trade dress.
B. Trademark.
C. Descriptive mark.
, D. Servicemark. - ✔✔D
✔✔Since there is no formal process for creating a trade secret, the risk control
measures associated with trade secret loss control focus on maintaining
A. Disclosure.
B. Secrecy.
C. Legality.
D. Accountability. - ✔✔B
✔✔A trademark that has been entered on the U.S. Patent and Trademark Office
(USPTO) Principal Register is automatically protected
A. For 25 years.
B. For 10 years.
C. For 5 years.
D. Indefinitely. - ✔✔B
✔✔The determination that an invention is actually a trade secret is
A. Often made by the courts.
B. Authenticated by the length of time the invention has been in use.
C. Confirmed by a search of the trade secret registry.
D. Established by customs and traditions of the trade for which the invention is used. -
✔✔A
✔✔An organization wants to create a trademark for its line of products. Which one of
the following risk control measures for trademarks should the organization use to avoid
the possibility of infringing on someone else's trademark?
A. Searches and watches
B. Restrictive covenants
C. Registration
D. Notice - ✔✔A
✔✔Which one of the following statements is true regarding a trade secret?
A. A trade secret has a limited life span.
B. A trade secret is created with a formal application.
C. A trade secret in force for 10 years automatically receives a patent.
D. A trade secret remains in force for as long as the secret can be maintained. - ✔✔D
✔✔A practice or method used confidentially by an organization to gain a competitive
advantage is
A. A trademark.
B. A trade secret.
C. A patent.
D. Goodwill. - ✔✔B
SOLUTIONS RATED A+
✔✔The major difference between a traditional experience rated insurance plan and a
retrospectively rated insurance plan is
A. The coverage limits available under each type of plan.
B. The period of loss experience that is used to adjust the premium.
C. Whether state premium taxes are levied on the premium for the coverage.
D. Which party, the insurer or the insured, provides loss adjustment services. - ✔✔B
✔✔When negotiating noninsurance risk transfer terms, risk management professionals
should consider the
A. Reduction in insurer risk charges and premium taxes that might result.
B. Legal enforceability of contract provisions.
C. Effect on the organization's relationship with its insurance broker.
D. Effect on the organization's insurance program. - ✔✔B
✔✔The characteristics of a captive insurer
A. Rarely involve the purchase reinsurance.
B. Normally cover only first-party losses.
C. Do not involve policy issuance.
D. Normally involve both retention and transfer. - ✔✔D
✔✔In the United States, the formation and operation of workers compensation pools are
regulated by the
A. National Council on Compensation Insurance (NCCI).
B. Individual states.
C. Occupational Safety and Health Act (OSHA).
D. Individual industries. - ✔✔B
✔✔One characteristic of captive insurance plans is that
A. Losses are rarely funded because of the operation of captives.
B. Administrative requirements are low because of the relationship between the owner
and captive.
C. The severity of losses transferred to captives is generally low to medium.
D. They typically require no retention. - ✔✔C
✔✔Hold-harmless agreements are
A. Enforceable without legal consideration.
B. Comprised of two parties—the indemnitor and the indemnitee.
C. Highly regulated.
D. Standardized. - ✔✔B
✔✔A retrospective rating plan
,A. Bases pricing on past loss experience.
B. Is a form of self-insurance.
C. Is considered to be guaranteed-cost insurance.
D. Is insurance that is subject to a rating formula. - ✔✔D
✔✔Which one of the following is true regarding patents?
A. Patents do not expire.
B. Plant patents are granted on biologically asexually reproducing plants.
C. Patent applications must show each user's name.
D. International standards apply to patents. - ✔✔B
✔✔A patent issued for an invention or process that has some usefulness, does not
have to be marketable, but must work is a
A. Process patent.
B. Design patent.
C. Plant patent.
D. Utility patent. - ✔✔D
✔✔The type of patent most appropriate for an invention or a process that has some
usefulness is a
A. Plant patent.
B. Service patent.
C. Utility patent.
D. Design patent. - ✔✔C
✔✔Betty has invented a new device that reduces the time it takes to backup computer
data by 90 percent. She believes this will be of interest to several major computer and
data manufacturers. Betty should protect her invention with a
A. Servicemark.
B. Copyright.
C. Trademark.
D. Patent. - ✔✔D
✔✔The duration of a patent right varies depending on the type of patent. Which one of
the following patents last for 14 years from the date of issuance?
A. Design patent
B. Plant patent
C. Process patent
D. Utility patent - ✔✔A
✔✔Brooks Irrigation Services has designed plans for a new lawn sprinkler system. In
order to safeguard their document and control infringement exposures, they have
placed the notation © 2012 Brooks Irrigation Services on their published plans. This is
known as a copyright
A. Restrictive covenant.
,B. Laches.
C. Registration.
D. Notice. - ✔✔D
✔✔Copyrights are generally owned by the person (author) who created the work,
except when the work
A. Has not been registered with the U.S. Copyright Office.
B. Was jointly prepared by two or more authors.
C. Was created in a reproducible medium such as video or audio tape.
D. Was created in the course of the author's employment. - ✔✔D
✔✔The product of human intelligence that has economic value defines
A. Trade secret.
B. Infringement.
C. Copyright.
D. Intellectual property. - ✔✔D
✔✔Which one of the following criteria must a creative work meet to be eligible for
copyright protection?
A. The work must be created in the course of the individual's employment.
B. The work must be created on commission.
C. The work must not be reproducible.
D. The work must be original. - ✔✔D
✔✔Which one of the following is a risk control measure that can be applied to copyright
infringement?
A. Unrestrictive covenants
B. Duplication
C. Registration
D. Insurance - ✔✔C
✔✔Hadley Computer Manufacturing is being sued by another computer manufacturer
because Hadley's logo is written in such a way that it confuses consumers regarding
which manufacturer is the creator of the product. This is an example of an infringement
of
A. Patent.
B. Servicemark.
C. Trademark.
D. Copyright. - ✔✔C
✔✔The way that an organization differentiates its services from its competitors services
is a
A. Trade dress.
B. Trademark.
C. Descriptive mark.
, D. Servicemark. - ✔✔D
✔✔Since there is no formal process for creating a trade secret, the risk control
measures associated with trade secret loss control focus on maintaining
A. Disclosure.
B. Secrecy.
C. Legality.
D. Accountability. - ✔✔B
✔✔A trademark that has been entered on the U.S. Patent and Trademark Office
(USPTO) Principal Register is automatically protected
A. For 25 years.
B. For 10 years.
C. For 5 years.
D. Indefinitely. - ✔✔B
✔✔The determination that an invention is actually a trade secret is
A. Often made by the courts.
B. Authenticated by the length of time the invention has been in use.
C. Confirmed by a search of the trade secret registry.
D. Established by customs and traditions of the trade for which the invention is used. -
✔✔A
✔✔An organization wants to create a trademark for its line of products. Which one of
the following risk control measures for trademarks should the organization use to avoid
the possibility of infringing on someone else's trademark?
A. Searches and watches
B. Restrictive covenants
C. Registration
D. Notice - ✔✔A
✔✔Which one of the following statements is true regarding a trade secret?
A. A trade secret has a limited life span.
B. A trade secret is created with a formal application.
C. A trade secret in force for 10 years automatically receives a patent.
D. A trade secret remains in force for as long as the secret can be maintained. - ✔✔D
✔✔A practice or method used confidentially by an organization to gain a competitive
advantage is
A. A trademark.
B. A trade secret.
C. A patent.
D. Goodwill. - ✔✔B
