ARM 400 TESTS STUDY GUIDE 2026 TESTED
QUESTIONS AND PRACTICE SOLUTION
GRADED A+
◉ diversifiable risk.
Answer: A risk that affects only some individuals, businesses, or
small groups.
◉ nondiversifiable risk.
Answer: a risk that affects the entire economy or large numbers of
persons or groups within the economy
◉ systemic risk.
Answer: The potential for a major disruption in the function of an
entire market or financial system.
◉ market risk.
Answer: risk that affects all companies in the stock market
◉ Liquidity Risk.
Answer: The risk that an asset cannot be sold on short notice
without incurring a loss
,◉ Hazard risk.
Answer: arises from property, liability, or personnel loss exposures.
◉ Operational Risk.
Answer: arises from people, processes, systems, or controls
◉ financial risk.
Answer: arises from the effect of market forces on financial assets or
liabilities
◉ Strategic Risk.
Answer: Arises from trends in the economy and society. Economic
Environment. Political Environment. Demographics Competition.
◉ risk management framework.
Answer: A foundation for applying the risk management process
throughout the organization.
◉ Process for managing risk.
Answer: -scan environment
-identify risks
, -analyze risks
-treat risks
-monitor and review
◉ Risk Criteria.
Answer: Information used as a basis for measuring the significance
of a risk.
◉ Internal Control.
Answer: A system or process that an organization uses to achieve its
operational goals, internal and external financial reporting goals, or
legal and regulatory compliance goals.
◉ Stakeholders.
Answer: any individuals or groups that are affected by the firm's
actions, such as owners, customers, suppliers, employees, creditors,
government, and the public
◉ External Environment.
Answer: opportunities/threats outside of organization
◉ internal environment.
QUESTIONS AND PRACTICE SOLUTION
GRADED A+
◉ diversifiable risk.
Answer: A risk that affects only some individuals, businesses, or
small groups.
◉ nondiversifiable risk.
Answer: a risk that affects the entire economy or large numbers of
persons or groups within the economy
◉ systemic risk.
Answer: The potential for a major disruption in the function of an
entire market or financial system.
◉ market risk.
Answer: risk that affects all companies in the stock market
◉ Liquidity Risk.
Answer: The risk that an asset cannot be sold on short notice
without incurring a loss
,◉ Hazard risk.
Answer: arises from property, liability, or personnel loss exposures.
◉ Operational Risk.
Answer: arises from people, processes, systems, or controls
◉ financial risk.
Answer: arises from the effect of market forces on financial assets or
liabilities
◉ Strategic Risk.
Answer: Arises from trends in the economy and society. Economic
Environment. Political Environment. Demographics Competition.
◉ risk management framework.
Answer: A foundation for applying the risk management process
throughout the organization.
◉ Process for managing risk.
Answer: -scan environment
-identify risks
, -analyze risks
-treat risks
-monitor and review
◉ Risk Criteria.
Answer: Information used as a basis for measuring the significance
of a risk.
◉ Internal Control.
Answer: A system or process that an organization uses to achieve its
operational goals, internal and external financial reporting goals, or
legal and regulatory compliance goals.
◉ Stakeholders.
Answer: any individuals or groups that are affected by the firm's
actions, such as owners, customers, suppliers, employees, creditors,
government, and the public
◉ External Environment.
Answer: opportunities/threats outside of organization
◉ internal environment.
