Risk Management

Business

Quiz 5 :

The Evolution of Risk Management: Enterprise Risk Management

Quiz 5 :

The Evolution of Risk Management: Enterprise Risk Management

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CAT bonds seek to protect the insurance industry from catastrophic events.
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True False
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True

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The strategy using forward contracts is known as "switch out of it" defense.
Free
True False
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False

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People interpret the term "firm's value" similarly with public and nonpublic companies.
Free
True False
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False

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Forward contract characteristics are standardized.
True False
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Both forwards and futures obligate the owner of the instrument to buy or sell an asset for a specified price at a specified time in the future.
True False
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A company is a "good citizen" if it abides by the law and pursues profits.
True False
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The enterprise risk manager depends on the actuarial and underwriting expertise to ensure the assets side of the business is well managed.
True False
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Life expectancy shows the length of life expected for people born in each year.
True False
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A put option acts like insurance to protect a floor selling price for a commodity.
True False
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The chief risk officer (CRO) is responsible for all risk elements of the firm-pure and opportunity risks.
True False
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Contingent surplus notes are securities backed by a pool of diversified assets.
True False
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Underwriters specialize in forecasting the losses and developing the losses' potential future impact on the insurers.
True False
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A call option grants the right to sell at the strike price.
True False
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Together, income statements and balance sheets are known as financial statements.
True False
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The strike price in an options contract is also called the exercise price.
True False
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Futures are traded in the over-the-counter market.
True False
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Due diligence is the process of evaluating risks, selecting which risks to accept, and identifying potential adverse selection.
True False
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The swap derivative can act as insurance to mitigate interest rate risk.
True False
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Franchise value is an alternative term for brand equity.
True False
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Capital and surplus represent debt on the balance sheet of a nonfinancial firm.
True False
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