FINA 4352 RISK TEST 2 EXAM QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS VERIFIED
Module 1.1
Which of the following is an example of a moral hazard?
A) A homeowner carelessly burns leaves on a windy day, resulting in fire damage
to his house.
B) A driver slams on his brakes for no reason other than to cause the driver
behind him to rear-end his car.
C) A car is damaged by a hailstorm.
D) A person falls and breaks her hip.
B) A driver slams on his brakes for no reason other than to cause the driver behind him
to rear-end his car.
Which of the following refers to the process of evaluating and classifying the risk
level of applicants for insurance?
A) Underwriting
B) Group insurance
C) Adverse selection
D) Liability review
A) Underwriting
A moral hazard occurs when dishonesty causes a loss or causes the amount of the loss
to be overstated on a claim.
Which of the following statements regarding insurable interest is CORRECT?
,For property and casualty insurance, insurable interest must exist when the
policy is issued and at the time of the loss.
For life insurance, insurable interest must exist at the time the policy is issued.
A) I only
B) Neither I nor II
C) II only
D) Both I and II
D) Both I and II
For property and and casualty insurance, insurable interest must exist at the time of the
loss; it must also exist at the time the policy is issued. For life insurance, insurable
interest must exist at the time the policy is issued.
Which of the following statements concerning the collateral source rule
are CORRECT?
The rule states that a person who commits a tort will be liable for full damages.
The person who commits a tort is liable for full damages, even though the plaintiff has
other sources of recovery available.
The collateral source rule prevents the person who committed the tort from benefiting
because of fortuitous circumstances.
Which of the following are particular risks?
Premature death
Disability
,Unemployment
Earthquake
Premature death
Disability
Unemployment
Ken owns a hardware store that fills customers' propane tanks. You are Ken's
insurance agent and are explaining insurance terms to Ken. Which of the
following statements is CORRECT?
Fire is a peril.
Leaving oily rags in a hardware store's repair shop area is a hazard.
The handling of propane is a hazard.
A pure risk is one that involves only the chance of loss or no loss; in other words,
there is no chance of gain.
Fire is a peril.
Leaving oily rags in a hardware store's repair shop area is a hazard.
The handling of propane is a hazard.
A pure risk is one that involves only the chance of loss or no loss; in other words, there
is no chance of gain.
Which of the following statements regarding risk management is CORRECT?
A)
Speculative risk involves the chance of loss or no loss.
B)
, Insurance manages risk by having a large pool of people share in the financial
losses suffered by members of the pool.
C)
Peril is the indifference to loss that creates carelessness and increases the
chance of loss due to the existence of insurance.
D)
A hazard is the cause of financial loss.
B) Insurance manages risk by having a large pool of people share in the financial losses
suffered by members of the pool.
Which of the following statements regarding risk management are CORRECT?
I. A misrepresentation is carelessness or indifference on the part of an individual
as to whether a loss occurs and/or the size of a loss if one does occur.
II. A morale hazard is a false and material statement made by an applicant for
insurance, providing a basis for the insurer to make the contract voidable.
A)
Both I and II
B)
II only
C)
I only
D)
Neither I nor II
D) Neither I nor II
WITH COMPLETE SOLUTIONS VERIFIED
Module 1.1
Which of the following is an example of a moral hazard?
A) A homeowner carelessly burns leaves on a windy day, resulting in fire damage
to his house.
B) A driver slams on his brakes for no reason other than to cause the driver
behind him to rear-end his car.
C) A car is damaged by a hailstorm.
D) A person falls and breaks her hip.
B) A driver slams on his brakes for no reason other than to cause the driver behind him
to rear-end his car.
Which of the following refers to the process of evaluating and classifying the risk
level of applicants for insurance?
A) Underwriting
B) Group insurance
C) Adverse selection
D) Liability review
A) Underwriting
A moral hazard occurs when dishonesty causes a loss or causes the amount of the loss
to be overstated on a claim.
Which of the following statements regarding insurable interest is CORRECT?
,For property and casualty insurance, insurable interest must exist when the
policy is issued and at the time of the loss.
For life insurance, insurable interest must exist at the time the policy is issued.
A) I only
B) Neither I nor II
C) II only
D) Both I and II
D) Both I and II
For property and and casualty insurance, insurable interest must exist at the time of the
loss; it must also exist at the time the policy is issued. For life insurance, insurable
interest must exist at the time the policy is issued.
Which of the following statements concerning the collateral source rule
are CORRECT?
The rule states that a person who commits a tort will be liable for full damages.
The person who commits a tort is liable for full damages, even though the plaintiff has
other sources of recovery available.
The collateral source rule prevents the person who committed the tort from benefiting
because of fortuitous circumstances.
Which of the following are particular risks?
Premature death
Disability
,Unemployment
Earthquake
Premature death
Disability
Unemployment
Ken owns a hardware store that fills customers' propane tanks. You are Ken's
insurance agent and are explaining insurance terms to Ken. Which of the
following statements is CORRECT?
Fire is a peril.
Leaving oily rags in a hardware store's repair shop area is a hazard.
The handling of propane is a hazard.
A pure risk is one that involves only the chance of loss or no loss; in other words,
there is no chance of gain.
Fire is a peril.
Leaving oily rags in a hardware store's repair shop area is a hazard.
The handling of propane is a hazard.
A pure risk is one that involves only the chance of loss or no loss; in other words, there
is no chance of gain.
Which of the following statements regarding risk management is CORRECT?
A)
Speculative risk involves the chance of loss or no loss.
B)
, Insurance manages risk by having a large pool of people share in the financial
losses suffered by members of the pool.
C)
Peril is the indifference to loss that creates carelessness and increases the
chance of loss due to the existence of insurance.
D)
A hazard is the cause of financial loss.
B) Insurance manages risk by having a large pool of people share in the financial losses
suffered by members of the pool.
Which of the following statements regarding risk management are CORRECT?
I. A misrepresentation is carelessness or indifference on the part of an individual
as to whether a loss occurs and/or the size of a loss if one does occur.
II. A morale hazard is a false and material statement made by an applicant for
insurance, providing a basis for the insurer to make the contract voidable.
A)
Both I and II
B)
II only
C)
I only
D)
Neither I nor II
D) Neither I nor II
