Risk Management

Business

Quiz 1 :

The Nature of Risk: Losses and Opportunities

Quiz 1 :

The Nature of Risk: Losses and Opportunities

Question Type
search
arrow
Managing risks associated with an objective of value maximization has succeeded more than managing risks when we use the context of minimization of losses.
Free
True False
Answer:

Answer:

False

Tags
Choose question tag
close menu
arrow
The more hazardous the conditions, the greater the severity of loss.
Free
True False
Answer:

Answer:

True

Tags
Choose question tag
close menu
arrow
A firm losing its clients because of street closure would be a direct loss.
Free
True False
Answer:

Answer:

False

Tags
Choose question tag
close menu
arrow
Risk is not synonymous with uncertainty.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Risks with a chance to either gain or lose are speculative risks.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Hazards are critical because our ability to reduce their effects will reduce both overall costs and variability.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Risks, which are idiosyncratic in nature, are often viewed as being amenable to having their financial consequences reduced or eliminated by holding a well-diversified portfolio.
True False
Answer:
Tags
Choose question tag
close menu
arrow
The notion of risk is inextricably linked to the notion of uncertainty.
True False
Answer:
Tags
Choose question tag
close menu
arrow
When summer humidity declines and temperature and wind velocity rise in heavily forested areas, the likelihood of fire increases.Conditions are such that a forest fire could start very easily and be difficult to contain.In this example, low humidity is a peril.
True False
Answer:
Tags
Choose question tag
close menu
arrow
The legal system is designed to mitigate risks and is not intended to create new risks.Therefore, it does not have the power of transferring the risk from your shoulders to mine.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Fundamental risks are generally nonsystemic and diversifiable.
True False
Answer:
Tags
Choose question tag
close menu
arrow
A gambler is likely to be risk neutral.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Market risk, such as devaluation of the dollar is an example of idiosyncratic risk.
True False
Answer:
Tags
Choose question tag
close menu
arrow
If a car is damaged in a collision, the time and effort required to arrange for repairs would be a consequential loss.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Economists consider most widely held or publicly traded corporations as making decisions in a risk-neutral manner since their shareholders have the ability to diversify away risk.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Most insurance industry contracts and education and training materials use the term "peril" to describe the enterprise, property, person, or activity facing a potential loss.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Morale hazards involve dishonesty on the part of people who take out insurance.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Moral and morale hazards are types of tangible hazards.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Hazards increase the probability of losses, their frequency, their severity, or both.
True False
Answer:
Tags
Choose question tag
close menu
arrow
Morale hazards do not involve dishonesty.
True False
Answer:
Tags
Choose question tag
close menu
Showing 1 - 20 of 74