- 1: The key
difference between pure risk and speculative risk is that:
- pure
risk involves the possibility of both profit and loss
speculative
risk involves the possibility of loss only
pure
risk involves the possibility of loss only
speculative
risk risk involves the possibility of profit only
-
- 2: According
to the Law of Large Numbers, which insurance company would be able
to predict most accurately the number of insureds who will die
each year?
- Company
A that insures 10,000 people of various ages
Company
B that insures 50,000 people of various ages
Company
C that insures 500,000 males age 40
Company
D that insures 50,000 males age 40
-
- 3: Only pure
risk can:
- lead
to loss
be insured
be predicted
result in gain
-
- 4: All of the
following are elements of an insurable risk EXCEPT the loss must
be:
- measurable
predictable
due to chance
catastrophic
-
- 5: An
attitude of indifference to the possibility of harm or loss is a(n):
- physical
hazard
moral hazard
morale hazard
uninsurable
peril
-
- 6: Which of
the following statements are correct?
- insurance
is a means of exchanging the uncertainty of a loss with a cost
with a small, certain cost
insurance
spreads the cost of financial loss among many persons
both
a and b are correct
neither
a and b are correct
-
- 7: Which of
the following is a hazard?
- fire
accident
death
blindness
-
- 8: Which of
the following is a peril?
- cigarette
smoking
recklessness
death
pre-existing
medical conditions
-
- 9:
"Substituting a small certain cost for a large uncertain
loss" refers to the principle of:
- risk
avoidance
indemnity
insurance
risk reduction
-
- 10: Which of
the following is a method of transferring risk?
- self-insurance
of workers' compensation claims
installation
of fire alarms and sprinkler system
purchase
of health insurance policy
avoiding
hazards such as skydiving
-
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