RMI2302 EXAM 2 QUESTIONS WITH
100% CORRECT ANSWERS LATEST
VERSION 2025/2026.
Expected Utility - ANS A method individuals use to make choices, reflecting their risk-averse
nature.
Expected Value - ANS A calculation used by organizations to assess the average outcome of a
decision, factoring in the cost of capital.
Present Value (PV) - ANS The current worth of a future sum of money or stream of cash flows
given a specified rate of return.
Lump sum Present Value formula - ANS PV = FV / (1 + r)^n
Annuity Present Value formula - ANS PV = PMT × [1 - (1 + r)^(-n)] / r
Biases in Decision Making - ANS Factors such as age, culture, experience, gender, and media
that can distort decision-making models.
Incentives - ANS Factors that can align behavior, including financial, moral, natural, and
coercive incentives.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Law of Unintended Consequences - ANS The principle that actions of people—and especially
of governments—always have effects that are unanticipated or unintended.
Loss Exposure - ANS The potential for loss that includes three elements: an asset exposed to
loss, a cause of loss (peril), and financial consequences.
Property Risk - ANS Risks associated with real and personal property, including perils like fire
and theft.
Liability Risk - ANS Risks related to financial loss due to breaches, crimes, or civil wrongs.
Life Risk (premature death) - ANS The risk associated with the potential loss of income due to
premature death, dependent on wage-earning status and dependents.
Life Risk (long life) - ANS The risk of outliving one's assets, leading to potential financial
insecurity.
Health/Disability Risk - ANS The risk that health issues will affect earning capacity while
expenses continue or increase.
Individual Risk Management Process - ANS A structured approach to managing risk that
includes setting objectives, identifying risks, evaluating them, choosing alternatives,
implementing, and reviewing.
College Student Specific Risks - ANS Risks faced by college students including anxiety,
depression, sexual violence, STDs, poor health, substance use, and the use of 'smart pills'.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
100% CORRECT ANSWERS LATEST
VERSION 2025/2026.
Expected Utility - ANS A method individuals use to make choices, reflecting their risk-averse
nature.
Expected Value - ANS A calculation used by organizations to assess the average outcome of a
decision, factoring in the cost of capital.
Present Value (PV) - ANS The current worth of a future sum of money or stream of cash flows
given a specified rate of return.
Lump sum Present Value formula - ANS PV = FV / (1 + r)^n
Annuity Present Value formula - ANS PV = PMT × [1 - (1 + r)^(-n)] / r
Biases in Decision Making - ANS Factors such as age, culture, experience, gender, and media
that can distort decision-making models.
Incentives - ANS Factors that can align behavior, including financial, moral, natural, and
coercive incentives.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Law of Unintended Consequences - ANS The principle that actions of people—and especially
of governments—always have effects that are unanticipated or unintended.
Loss Exposure - ANS The potential for loss that includes three elements: an asset exposed to
loss, a cause of loss (peril), and financial consequences.
Property Risk - ANS Risks associated with real and personal property, including perils like fire
and theft.
Liability Risk - ANS Risks related to financial loss due to breaches, crimes, or civil wrongs.
Life Risk (premature death) - ANS The risk associated with the potential loss of income due to
premature death, dependent on wage-earning status and dependents.
Life Risk (long life) - ANS The risk of outliving one's assets, leading to potential financial
insecurity.
Health/Disability Risk - ANS The risk that health issues will affect earning capacity while
expenses continue or increase.
Individual Risk Management Process - ANS A structured approach to managing risk that
includes setting objectives, identifying risks, evaluating them, choosing alternatives,
implementing, and reviewing.
College Student Specific Risks - ANS Risks faced by college students including anxiety,
depression, sexual violence, STDs, poor health, substance use, and the use of 'smart pills'.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
