CPCU 500 Exam 2 Questions And Answers
Verified 100% Correct
Which one of the following statements is true regarding the
basic measures that apply to risk management?
Select one:
A. Longer time horizons are generally less risky that shorter
ones.
B. Consequences measure the degree to which an
occurrence could positively or negatively affect an
organization.
C. Hedging is a risk management strategy that can reduce
the risk of correlation.
D. Risk increases as volatility decreases. - ANSWER -B.
Consequences measure the degree to which an occurrence
could positively or negatively affect an organization.
Company G is a manufacturer of high profile golf equipment.
The risk management professional for Company G is
concerned about loss of business related to product design.
Failing to respond to changing customer demand and
preferences in the design of golf clubs could cost Company
G significant market share. Categorized according to the
quadrants of risk, this exposure to loss is classified as Select
one:
A. A financial risk.
B. A hazard risk.
, C. An operational risk.
D. A strategic risk. - ANSWER -D. A strategic risk.
Mid-State Packing Company, a meat processing company, is
the largest private sector employer in Metro City. First
National Bank of Metro City loans money to Mid-State
Packing Company and to many of the employees of MidState.
The problem with First National Bank of Metro City loaning
money to both the business and many employees of the
business is that
Select one:
A. Loan defaults are likely to be highly correlated.
B. The interest rate charged on the loans must be equal.
C. There will be a mismatch between fixed-rate and
variablerate loans.
D. The loan durations must be the same - ANSWER -A. Loan
defaults are likely to be highly correlated.
An organization must meet the standard of care that it owes
to others in order to ensure that
Select one:
A. Operations are efficient.
B. Legal obligations are satisfied.
Verified 100% Correct
Which one of the following statements is true regarding the
basic measures that apply to risk management?
Select one:
A. Longer time horizons are generally less risky that shorter
ones.
B. Consequences measure the degree to which an
occurrence could positively or negatively affect an
organization.
C. Hedging is a risk management strategy that can reduce
the risk of correlation.
D. Risk increases as volatility decreases. - ANSWER -B.
Consequences measure the degree to which an occurrence
could positively or negatively affect an organization.
Company G is a manufacturer of high profile golf equipment.
The risk management professional for Company G is
concerned about loss of business related to product design.
Failing to respond to changing customer demand and
preferences in the design of golf clubs could cost Company
G significant market share. Categorized according to the
quadrants of risk, this exposure to loss is classified as Select
one:
A. A financial risk.
B. A hazard risk.
, C. An operational risk.
D. A strategic risk. - ANSWER -D. A strategic risk.
Mid-State Packing Company, a meat processing company, is
the largest private sector employer in Metro City. First
National Bank of Metro City loans money to Mid-State
Packing Company and to many of the employees of MidState.
The problem with First National Bank of Metro City loaning
money to both the business and many employees of the
business is that
Select one:
A. Loan defaults are likely to be highly correlated.
B. The interest rate charged on the loans must be equal.
C. There will be a mismatch between fixed-rate and
variablerate loans.
D. The loan durations must be the same - ANSWER -A. Loan
defaults are likely to be highly correlated.
An organization must meet the standard of care that it owes
to others in order to ensure that
Select one:
A. Operations are efficient.
B. Legal obligations are satisfied.
