AIDA 182 FINAL EXAM NEWEST ACTUAL EXAM
COMPLETE 200 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |
ALREADY GRADED A+
Risk quadrants are different from risk classifications. Risk quadrants focus on what?
- ANSWER The source of the risk itself and what part of the organization has
managed it in the past.
An enterprise risk management approach is categorizing risks into quadrants. What
are hazard risks? - ANSWER Normally managed by risk management
professionals.
What are the four risks in the enterprise risk management model? - ANSWER
Hazard, operational, financial, and hazard.
What risk quadrant is the change of stocks or bonds values because interest rate
changes in? - ANSWER Financial risks.
What is true of pure and speculative risks? - ANSWER All businesses involve
speculative risks.
What is true of diversifiable and nondiversifiable risks? - ANSWER Systemic risks
are nondiversifiable generally.
What is an example of a strategic risk? - ANSWER A new computer chip that could
give a company growth.
What is an example of an operational risk? - ANSWER The ability of suppliers to
perform.
What is true of subjective and objective risks? - ANSWER Subjective risk can be
present where objective risk is not.
What is an example of a speculative risk? - ANSWER Investing in stock.
What is true of diversifiable versus nondiversifiable risk? - ANSWER Diversifiable
risks are not correlated and can be managed through diversification or spread of risk.
A company's fleet of cars is worrying the managers liquidity of the company and fuel
prices having an adverse effect is which type of risk quadrant? - ANSWER
Financial risk.
, An employee embezzling funds from a company for not feeling adequately paid is
what risk? - ANSWER Both a hazard and an operational risk.
Failing to respond to changing customer demands is an example of what risk? -
ANSWER Strategic risk.
The fear of your home being hit by a storm and damaged or destroyed is what risk
for you? - ANSWER A subjective risk.
What quadrant of risk is a harmful chemical found in a building with unknown harm to
residents and to the clean up crew part of? - ANSWER A hazard risk.
Driving instead of flying because of feeling of safety is an example of what? -
ANSWER A subjective risk.
Investing money in a rental property brings what? - ANSWER Both speculative and
pure risks. The property values can increase or decrease and the building could burn
down.
Increased competition is an example of what? - ANSWER A strategic risk.
Renovating a warehouse, purchasing a new order processing software, added two
new delivery trucks, and purchasing a production machine which also allows for
potential for a new product line, are all projects. Which project is the most
speculative? - ANSWER The new production machine.
What is a true statement on the basic measures applying to risk management? -
ANSWER Consequences measure the degree to which an occurrence could
positively or negatively affect an organization.
The law of large numbers states as the number of exposure units increases, what
happens? - ANSWER The relative accuracy of predictions about future losses
increase.
Which two measures are important in assessing risk and how to manage it? -
ANSWER Consequences and likelihood.
What is the measure of the biggest potential loss of an occurrence. - ANSWER An
exposure.
Giving discounts to everyone in one segment of your book of business or a bank in
the same town as a business it gives loans to including its employees, are both
examples of high correlation. What is true about correlation? - ANSWER When two
variables are perfectly positively correlated, one variable increases, and the other will
increase in direct proportion.
Covariance is different from correlation in that correlation represents how strongly
variables are related. Covariance is the measure of correlation. Therefore,
COMPLETE 200 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |
ALREADY GRADED A+
Risk quadrants are different from risk classifications. Risk quadrants focus on what?
- ANSWER The source of the risk itself and what part of the organization has
managed it in the past.
An enterprise risk management approach is categorizing risks into quadrants. What
are hazard risks? - ANSWER Normally managed by risk management
professionals.
What are the four risks in the enterprise risk management model? - ANSWER
Hazard, operational, financial, and hazard.
What risk quadrant is the change of stocks or bonds values because interest rate
changes in? - ANSWER Financial risks.
What is true of pure and speculative risks? - ANSWER All businesses involve
speculative risks.
What is true of diversifiable and nondiversifiable risks? - ANSWER Systemic risks
are nondiversifiable generally.
What is an example of a strategic risk? - ANSWER A new computer chip that could
give a company growth.
What is an example of an operational risk? - ANSWER The ability of suppliers to
perform.
What is true of subjective and objective risks? - ANSWER Subjective risk can be
present where objective risk is not.
What is an example of a speculative risk? - ANSWER Investing in stock.
What is true of diversifiable versus nondiversifiable risk? - ANSWER Diversifiable
risks are not correlated and can be managed through diversification or spread of risk.
A company's fleet of cars is worrying the managers liquidity of the company and fuel
prices having an adverse effect is which type of risk quadrant? - ANSWER
Financial risk.
, An employee embezzling funds from a company for not feeling adequately paid is
what risk? - ANSWER Both a hazard and an operational risk.
Failing to respond to changing customer demands is an example of what risk? -
ANSWER Strategic risk.
The fear of your home being hit by a storm and damaged or destroyed is what risk
for you? - ANSWER A subjective risk.
What quadrant of risk is a harmful chemical found in a building with unknown harm to
residents and to the clean up crew part of? - ANSWER A hazard risk.
Driving instead of flying because of feeling of safety is an example of what? -
ANSWER A subjective risk.
Investing money in a rental property brings what? - ANSWER Both speculative and
pure risks. The property values can increase or decrease and the building could burn
down.
Increased competition is an example of what? - ANSWER A strategic risk.
Renovating a warehouse, purchasing a new order processing software, added two
new delivery trucks, and purchasing a production machine which also allows for
potential for a new product line, are all projects. Which project is the most
speculative? - ANSWER The new production machine.
What is a true statement on the basic measures applying to risk management? -
ANSWER Consequences measure the degree to which an occurrence could
positively or negatively affect an organization.
The law of large numbers states as the number of exposure units increases, what
happens? - ANSWER The relative accuracy of predictions about future losses
increase.
Which two measures are important in assessing risk and how to manage it? -
ANSWER Consequences and likelihood.
What is the measure of the biggest potential loss of an occurrence. - ANSWER An
exposure.
Giving discounts to everyone in one segment of your book of business or a bank in
the same town as a business it gives loans to including its employees, are both
examples of high correlation. What is true about correlation? - ANSWER When two
variables are perfectly positively correlated, one variable increases, and the other will
increase in direct proportion.
Covariance is different from correlation in that correlation represents how strongly
variables are related. Covariance is the measure of correlation. Therefore,
