CPCU 500 3rd Edition Final Practice exam 1 Questions And Answers Latest Update
CPCU 500 3rd Edition Final Practice exam 1
Questions And Answers Latest Update
Risk involves the possibility of a negative outcome. Possibility means - ✔✔✔-That
an outcome may or may not occur.
Risk can be classified as subjective or objective. Which one of the following
statements is correct with respect to these risk classifications? - ✔✔✔-Subjective
risk can exist even where objective risk does not.
The concept of correlation, in the context of why enterprise risk management
works, - ✔✔✔-Is the proposition that correlation increases risk while uncorrelated
risks can reduce risk
The use of data gleaned from sensors to react immediately to hazardous situations
is known as - ✔✔✔-Real-time risk management.
Delmond Manufacturing is opening a new manufacturing facility in a building that it
purchased from a competitor. Using the information below, which one of the
following represents the cost of risk of opening the new facility?
New building cost $60.0 million Safety system upgrades $6.0 million Insurance
premiums $1.5 million
Retained losses $3.0 million
Risk management department budget at the site $1.0 million - ✔✔✔-$11.5 million
An organization must meet the standard of care that it owes to others in order to
ensure that - ✔✔✔-Legal obligations are satisfied
A risk management program must be monitored and periodically revised, and that
revision involves four steps. Which one of the following is one of those four steps? -
✔✔✔-Compare actual results with the established performance standards.
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, CPCU 500 3rd Edition Final Practice exam 1 Questions And Answers Latest Update
Property insurance policies not only protect the property owner but also generally
protect a secured lender's interest in the financed property by - ✔✔✔-Naming the
lender on the owner's policy.
Perils are an important aspect of property insurance. Which one of the following
statements is correct with respect to perils? - ✔✔✔-A peril is the actual means by
which property is damaged or destroyed such as fire, lightning, windstorm, hail, or
theft.
A building contractor uses lower grade materials than called for in the
specifications for an office building. A year after the building was completed, a
balcony collapses, injuring several employees and customers and causing damage
to the building and contents. For the building construction company, this is an
example of - ✔✔✔-A completed operations liability exposure.
Josephine Redmond who is the sole proprietor of Dream Quilts, Inc., operates out of
three branch offices with 17 employees. What happens to Josephine's business if
she dies or retires? - ✔✔✔-The business ceases to exist
An auto dealer's showroom is destroyed by fire, and the dealer has to temporarily
rent an adjacent building to use as a showroom. This is an example of - ✔✔✔-An
extra expense
Which one of the following is correct with respect to compliance reviews? - ✔✔✔-
Monitoring and maintaining compliance through compliance reviews can prevent
significant losses that the organization would otherwise incur.
In order to avoid underestimating or overestimating loss projections, historical loss
data must be expressed in - ✔✔✔-Constant dollars.
Probability analysis is best suited for organizations that have - ✔✔✔-A substantial
volume of data on past losses
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CPCU 500 3rd Edition Final Practice exam 1
Questions And Answers Latest Update
Risk involves the possibility of a negative outcome. Possibility means - ✔✔✔-That
an outcome may or may not occur.
Risk can be classified as subjective or objective. Which one of the following
statements is correct with respect to these risk classifications? - ✔✔✔-Subjective
risk can exist even where objective risk does not.
The concept of correlation, in the context of why enterprise risk management
works, - ✔✔✔-Is the proposition that correlation increases risk while uncorrelated
risks can reduce risk
The use of data gleaned from sensors to react immediately to hazardous situations
is known as - ✔✔✔-Real-time risk management.
Delmond Manufacturing is opening a new manufacturing facility in a building that it
purchased from a competitor. Using the information below, which one of the
following represents the cost of risk of opening the new facility?
New building cost $60.0 million Safety system upgrades $6.0 million Insurance
premiums $1.5 million
Retained losses $3.0 million
Risk management department budget at the site $1.0 million - ✔✔✔-$11.5 million
An organization must meet the standard of care that it owes to others in order to
ensure that - ✔✔✔-Legal obligations are satisfied
A risk management program must be monitored and periodically revised, and that
revision involves four steps. Which one of the following is one of those four steps? -
✔✔✔-Compare actual results with the established performance standards.
©®™ Page 1
, CPCU 500 3rd Edition Final Practice exam 1 Questions And Answers Latest Update
Property insurance policies not only protect the property owner but also generally
protect a secured lender's interest in the financed property by - ✔✔✔-Naming the
lender on the owner's policy.
Perils are an important aspect of property insurance. Which one of the following
statements is correct with respect to perils? - ✔✔✔-A peril is the actual means by
which property is damaged or destroyed such as fire, lightning, windstorm, hail, or
theft.
A building contractor uses lower grade materials than called for in the
specifications for an office building. A year after the building was completed, a
balcony collapses, injuring several employees and customers and causing damage
to the building and contents. For the building construction company, this is an
example of - ✔✔✔-A completed operations liability exposure.
Josephine Redmond who is the sole proprietor of Dream Quilts, Inc., operates out of
three branch offices with 17 employees. What happens to Josephine's business if
she dies or retires? - ✔✔✔-The business ceases to exist
An auto dealer's showroom is destroyed by fire, and the dealer has to temporarily
rent an adjacent building to use as a showroom. This is an example of - ✔✔✔-An
extra expense
Which one of the following is correct with respect to compliance reviews? - ✔✔✔-
Monitoring and maintaining compliance through compliance reviews can prevent
significant losses that the organization would otherwise incur.
In order to avoid underestimating or overestimating loss projections, historical loss
data must be expressed in - ✔✔✔-Constant dollars.
Probability analysis is best suited for organizations that have - ✔✔✔-A substantial
volume of data on past losses
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