RMI 3011 - EXAM 1 (Melvin Stith)
Question and answers rated A+
Risk - correct answer ✔Uncertainty concerning the occurrence of a loss
Risk - correct answer ✔used to identify the property or life that is being
considered for insurance
Risk - correct answer ✔used in situations where the probabilities of possible
outcomes are known
Uncertainty - correct answer ✔used in situations where such probabilities
cannot be estimated
Loss Exposure - correct answer ✔Any situation or circumstance in which a
loss is possible, regardless of whether a loss occurs
Objective risk - correct answer ✔defined as the relative variation of actual
loss from expected loss
Subjective (perceived) risk - correct answer ✔defined as uncertainty based
on a person's mental condition or state of mind
Chance of loss - correct answer ✔The probability that an event will occur
Objective probability - correct answer ✔the long-run relative frequency of an
event based on the assumptions of an infinite number of observations and of
no change in the underlying conditions
, Subjective probability - correct answer ✔the individual's personal estimate of
the chance of loss
Peril - correct answer ✔the cause of the loss
Hazard - correct answer ✔a condition that increases the chance of loss
physical hazard - correct answer ✔a physical condition that
increases the frequency or severity of loss
Moral hazard - correct answer ✔dishonesty or character defects in an
individual that increase the frequency or severity of loss
Attitudinal Hazard (Morale Hazard) - correct answer ✔carelessness or
indifference to a loss, which increases the frequency or severity of a loss
Legal Hazard - correct answer ✔to characteristics of the legal system or
regulatory environment that increase the frequency or severity of losses
pure risk - correct answer ✔a situation in which there are only the
possibilities of loss or no loss (earthquake)
speculative risk - correct answer ✔a situation in which either profit or loss is
possible (gambling)
diversifiable risk - correct answer ✔affects only individuals or small groups
(car theft)
Question and answers rated A+
Risk - correct answer ✔Uncertainty concerning the occurrence of a loss
Risk - correct answer ✔used to identify the property or life that is being
considered for insurance
Risk - correct answer ✔used in situations where the probabilities of possible
outcomes are known
Uncertainty - correct answer ✔used in situations where such probabilities
cannot be estimated
Loss Exposure - correct answer ✔Any situation or circumstance in which a
loss is possible, regardless of whether a loss occurs
Objective risk - correct answer ✔defined as the relative variation of actual
loss from expected loss
Subjective (perceived) risk - correct answer ✔defined as uncertainty based
on a person's mental condition or state of mind
Chance of loss - correct answer ✔The probability that an event will occur
Objective probability - correct answer ✔the long-run relative frequency of an
event based on the assumptions of an infinite number of observations and of
no change in the underlying conditions
, Subjective probability - correct answer ✔the individual's personal estimate of
the chance of loss
Peril - correct answer ✔the cause of the loss
Hazard - correct answer ✔a condition that increases the chance of loss
physical hazard - correct answer ✔a physical condition that
increases the frequency or severity of loss
Moral hazard - correct answer ✔dishonesty or character defects in an
individual that increase the frequency or severity of loss
Attitudinal Hazard (Morale Hazard) - correct answer ✔carelessness or
indifference to a loss, which increases the frequency or severity of a loss
Legal Hazard - correct answer ✔to characteristics of the legal system or
regulatory environment that increase the frequency or severity of losses
pure risk - correct answer ✔a situation in which there are only the
possibilities of loss or no loss (earthquake)
speculative risk - correct answer ✔a situation in which either profit or loss is
possible (gambling)
diversifiable risk - correct answer ✔affects only individuals or small groups
(car theft)
