Test One Fall 2008 092908

Test One Fall 2008 092908 - Principles of Risk Management...

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Principles of Risk Management and Insurance, Fall 2008 06F:102: SCB Name________________________________________ The Howard’s are away on a vacation. Upon their return, they found that a tornado struck the area and damaged their garage on September 1. Additionally, their water heater leaked on September 10 into their basement family room, damaging all the contents of the family room. The damage to their roof is $5000; the damage to their family room is $15,000. The Howard’s property policy has a $ 500 deductible for every loss. (Please use this scenario for the next eight questions) 1. The tornado is considered what type of classification of risk? a. Particular b. Fundamental c. Dynamic d. Speculative 2. The water leak is considered what type of classification of risk? a. Speculative b. Fundamental c. Dynamic d. Particular 3. The self insurance amount that the Howard’s have decided to maintain is equal to? a. the amount of the loss b. the amount of the damages c. the amount of damages less the deductible d. the deductible amount on the policy 4. The classification of pure risk that is identified in the above scenario for the Howard’s is? a. Liability risk b. Products risk c. Personal risk d. Property risk 5. Generally, the four perils associated with personal risks are: a. liability, property, products, contracts b. property, speculative, fundamental and dynamic c. premature death, dependent old age, sickness/disability, unemployment d. dynamic, contracts, liability, sickness/disability 6. In the Howard scenario above, it was discovered that the water heater leaked due to a broken value. The broken value would be considered? a. Moral hazard b. Morale hazard c. Physical hazard d. Legal hazard 7. In the Howard scenario above, if it was learned that the water heater leaked due to a broken value that was repaired under a contract by ACME electric, what would be the type of classification of risk that created a financial loss to the Howard’s? a. Liability risk b. Property risk c. Personal risk d. Risks arising from the failure of others 8. In the Howard scenario above what would be the classification of risk for the ACME electric? a. Peril/hazard risk b. Speculative risk c. Liability risk d. Fundamental risk
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9. The definition of risk often includes the following: a. Chance of loss, uncertainty, probability b. Pure risk, speculative risk, dynamic risk c. Financial impact, particular risk, perils d. Fundamental risks, particular risk, speculative 10. Pure risk can be defined as? a. Gambling b. Probability c. Loss or No loss d. Uncertainty 11. Risk management is generally defined by the authors as: a. Objective analysis of financial impacts of a limited number of exposures b. Subjective and objective analysis, identifying projected outcomes c. Scientific approach dealing with risks, design process and procedures to minimize the occurrence and the financial impact of losses d. Operations management implementing enterprise wide solutions 12. One risk that is often hard to measure but affects many businesses is the potential loss associated with negative
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This note was uploaded on 04/01/2012 for the course 06F 102 taught by Professor Donnal.pearcy during the Spring '11 term at University of Iowa.

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Test One Fall 2008 092908 - Principles of Risk Management...

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