RM Quiz 1 Chap 1-4 - Quiz One - RM 357e - Chapters One thru...

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Quiz One - RM 357e - Chapters One thru Four Name___________________________________ UT EID___________________________ You may write on this quiz. Turn it and your scantron in, when you've completed your quiz answers. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1. Traditionally, risk has been defined as a. any situation in which the probability of loss is zero. b. any situation in which the probability of loss is one. c. the probability of a loss occurring. d. uncertainty concerning the occurrence of loss. 1. 2. A peril is a. the probability that a loss will occur. b. the cause of a loss. c. a moral hazard. d. a condition which increases the chance of a loss. 2. 3. Indifference to loss because of the existence of insurance is an example of a a. morale hazard. b. physical hazard. c. objective probability. d. moral hazard. 3. 4. Taylor Tobacco Company is concerned that the company may be held liable in a court of law and ordered to pay a large damage award. The characteristics of the judicial system that increase the frequency and severity of losses are known as a. moral hazard. b. legal hazard. c. speculative risk. d. particular risk. 4. 5. All of the following are examples of direct property losses EXCEPT a. the destruction of a firm's manufacturing plant by an earthquake. b. the cost of renting a substitute vehicle while a collision-damaged car is being repaired. c. the theft of a person's jewelry. d. the vandalism of a person's automobile. 5. 6. All of the following are characteristics of insurance EXCEPT a. payment of fortuitous losses. b. indemnification. c. pooling of losses. d. risk avoidance. 6. 7. According to the law of large numbers, what should happen as an insurer increases the number of units insured? a. Underwriting expenses should decrease.
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RM Quiz 1 Chap 1-4 - Quiz One - RM 357e - Chapters One thru...

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