Chapter 1 f
Risk in Our Society
f f f
1) Traditionally,f riskf hasf beenf definedf as
A) anyf situationf inf whichf thef probabilityf off lossf isf one.
B) anyf situationf inf whichf thef probabilityf off lossf isf zero.
C) uncertaintyf concerningf thef occurrencef off loss.
D) thef probabilityf offaf lossf occurring.
Answer:f C
QuestionfStatus:fRevised
2) Objectivef riskf isf definedf as
A) thef probabilityf off loss.
B) thef relativef variationf off actualf lossf fromf expectedf loss.
C) uncertaintyf basedf onf af personʹsf mentalf conditionf orf statef off mind.
D) thef causef off loss.
Answer:f B
QuestionfStatus:fPreviousfEdition
3) Anfinsurancefcompanyfestimatesfitsfobjectivefriskfforf10,000fexposuresfatf10fpercent.fAssumingfthefpro
babilityfofflossfremainsfthefsame,fwhatfwouldfhappenftofthefobjectivefriskfiffthefnumberfoffexposuresfw
ereftofincreaseftof1fmillion?
A) Itf wouldf decreasef tof 1f percent.
B) Itf wouldf decreasef tof 5f percent.
C) Itf wouldf remainf thef same.
D) Itf wouldf increasef tof 20f percent.
Answer:f A
QuestionfStatus:fPreviousfEdition
4) Uncertaintyf basedf onf af personʹsf mentalf conditionf orf statef off mindf isf knownf as
A) objectivef risk.
B) subjectivef risk.
C) objectivef probability.
D) subjectivef probability.
Answer:f B
QuestionfStatus:fPreviousfEdition
, 2 Rejdaf·fPrinciplesfoffRiskfManagementfandfInsurance,fTenthfEdition
5) Theflong-
runfrelativeffrequencyfoffanfeventfbasedfonfthefassumptionfoffanfinfinitefnumberfoffobservationsf
withfnofchangefinfthefunderlyingfconditionsfisfcalled
A) objectivef probability.
B) objectivef risk.
C) subjectivef probability.
D) subjectivef risk.
Answer:f A
QuestionfStatus:fPreviousfEdition
6) Whichf off thef followingf statementsf aboutf af priorif probabilitiesf isf correct?
A) Theyf aref subjectivef probabilitiesf basedf onf ambiguityf inf thef wayf probabilityf isf perceived.
B) Theyfarefsubjectivefprobabilitiesfthatfmayfvaryfamongfindividualsfbecausefofffactorsfsuchfasfage,
fgender,feducation,fandfthefusefoffalcohol.
C) Theyf aref objectivef probabilitiesf thatf canf bef determinedf byf deductivef reasoning.
D) Theyf aref objectivef probabilitiesf thatf canf bef determinedf byf subjectivef reasoning.
Answer:f C
QuestionfStatus:fPreviousfEdition
7) Anf individualʹsf personalf estimatef off thef chancef off lossf is
A) anf objectivef probability.
B) anf objectivef risk.
C) af subjectivef probability.
D) anfaf priorif probability.
Answer:f C
QuestionfStatus:fPreviousfEdition
8) Af perilf is
A) af moralf hazard.
B) thefcausef off af loss.
C) af conditionf whichf increasesf thef chancef off af loss.
D) thef probabilityf thatf af lossf willf occur.
Answer:f B
QuestionfStatus:fPreviousfEdition
Risk in Our Society
f f f
1) Traditionally,f riskf hasf beenf definedf as
A) anyf situationf inf whichf thef probabilityf off lossf isf one.
B) anyf situationf inf whichf thef probabilityf off lossf isf zero.
C) uncertaintyf concerningf thef occurrencef off loss.
D) thef probabilityf offaf lossf occurring.
Answer:f C
QuestionfStatus:fRevised
2) Objectivef riskf isf definedf as
A) thef probabilityf off loss.
B) thef relativef variationf off actualf lossf fromf expectedf loss.
C) uncertaintyf basedf onf af personʹsf mentalf conditionf orf statef off mind.
D) thef causef off loss.
Answer:f B
QuestionfStatus:fPreviousfEdition
3) Anfinsurancefcompanyfestimatesfitsfobjectivefriskfforf10,000fexposuresfatf10fpercent.fAssumingfthefpro
babilityfofflossfremainsfthefsame,fwhatfwouldfhappenftofthefobjectivefriskfiffthefnumberfoffexposuresfw
ereftofincreaseftof1fmillion?
A) Itf wouldf decreasef tof 1f percent.
B) Itf wouldf decreasef tof 5f percent.
C) Itf wouldf remainf thef same.
D) Itf wouldf increasef tof 20f percent.
Answer:f A
QuestionfStatus:fPreviousfEdition
4) Uncertaintyf basedf onf af personʹsf mentalf conditionf orf statef off mindf isf knownf as
A) objectivef risk.
B) subjectivef risk.
C) objectivef probability.
D) subjectivef probability.
Answer:f B
QuestionfStatus:fPreviousfEdition
, 2 Rejdaf·fPrinciplesfoffRiskfManagementfandfInsurance,fTenthfEdition
5) Theflong-
runfrelativeffrequencyfoffanfeventfbasedfonfthefassumptionfoffanfinfinitefnumberfoffobservationsf
withfnofchangefinfthefunderlyingfconditionsfisfcalled
A) objectivef probability.
B) objectivef risk.
C) subjectivef probability.
D) subjectivef risk.
Answer:f A
QuestionfStatus:fPreviousfEdition
6) Whichf off thef followingf statementsf aboutf af priorif probabilitiesf isf correct?
A) Theyf aref subjectivef probabilitiesf basedf onf ambiguityf inf thef wayf probabilityf isf perceived.
B) Theyfarefsubjectivefprobabilitiesfthatfmayfvaryfamongfindividualsfbecausefofffactorsfsuchfasfage,
fgender,feducation,fandfthefusefoffalcohol.
C) Theyf aref objectivef probabilitiesf thatf canf bef determinedf byf deductivef reasoning.
D) Theyf aref objectivef probabilitiesf thatf canf bef determinedf byf subjectivef reasoning.
Answer:f C
QuestionfStatus:fPreviousfEdition
7) Anf individualʹsf personalf estimatef off thef chancef off lossf is
A) anf objectivef probability.
B) anf objectivef risk.
C) af subjectivef probability.
D) anfaf priorif probability.
Answer:f C
QuestionfStatus:fPreviousfEdition
8) Af perilf is
A) af moralf hazard.
B) thefcausef off af loss.
C) af conditionf whichf increasesf thef chancef off af loss.
D) thef probabilityf thatf af lossf willf occur.
Answer:f B
QuestionfStatus:fPreviousfEdition
