Chap011 - Chapter 11 Loss Control I. Multiple Choice 1. A...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 11 Loss Control I. Multiple Choice 1. A particular loss control effort will be undertaken if a. the expected frequency of losses is reduced b. the expected severity of losses is reduced c. expected losses are reduced by an amount greater than the cost of the loss control effort d. all of the above Answer: c Type: K 2. Loss Prevention activities are aimed at reducing the a. frequency of losses b. size of a loss (for if and when a loss occurs) c. probability of loss to zero d. all of the above Answer: a Type: K 3. FunFun Toys produces assorted toy rockets. It has discovered that its water pressure rockets have a tendency to tip over just before take off thereby flying parallel, and low, to the ground. FunFun has decided to quit producing this toy rocket. This is an example of a. loss control b. loss prevention c. loss avoidance d. all of the above Answer: d Type: A 4. Loss Reduction activities are aimed at reducing the a. frequency of losses b. size of a loss (for if and when a loss occurs) c. probability of loss to zero d. all of the above 66
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Type: K 5. Segregation of exposure units can reduce a. the expected frequency of losses b. the expected severity of losses c. both the expected frequency and expected severity of losses d. only those losses that result from natural disasters Answer: b Type: K 6. Insurance coverage can reduce the incentives to undertake loss control activities if insurers a. help pay for the loss control b. don’t reduce insurance premiums to reflect the effects of the loss control activities c. pay for losses anyway d. lower premiums after loss control is implemented Answer: b Type: K Use the following information to answer questions 7-10. PTM Inc. is evaluating a loss control plan. The costs and benefits are as follows; (Ignore the implications of possible reduced insurance premiums.) Today End of Year 1 End of Years 2-5 Loss Control Expenditures $10,000 $4,000 0 Reduction in Expected Losses 0 $3,400 $3,400 7. Using a cost of capital of 6%, what is the present value of the loss control expenditures (rounded to the nearest dollar)? a.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/24/2011 for the course IDS 472 taught by Professor Wang during the Spring '10 term at UChicago.

Page1 / 7

Chap011 - Chapter 11 Loss Control I. Multiple Choice 1. A...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online