XCEL Chapter 2 Questions With Answers.

XCEL Chapter 2 Questions With
Answers.
Which of the following refers to a condition that may increase the chance of a loss? -
ANSWER- Hazard

Which of the following is a circumstance in which there is a possibility of both a loss or a
gain? - ANSWER- Speculative risk

A situation in which there is ONLY a chance of loss or no loss is a - ANSWER- pure risk

Restoring an insured to the same condition as before a loss is known as - ANSWER-
Principle of indemnity

Moral hazard is described as the - ANSWER- increased chance of a loss because of an
insured's dishonest tendencies

Which of the following describes the statement "The more times an event is repeated,
the more predictable the outcome becomes"? - ANSWER- Law of large numbers

Which type of risk is gambling? - ANSWER- Speculative risk

Which of the following is NOT considered a definition of risk? - ANSWER- The cause of
a loss

Which of the following is NOT an element of an insurable risk? - ANSWER- Loss must
be catastrophic

Which of the following would NOT be accomplished with the purchase of an insurance
policy? - ANSWER- Risk is eliminated