Chapter 1 Discussion Questions
1. Give the two alternative definitions of risk used in your text.
1. Uncertainty of outcome (residual uncertainty)
2. expected loss
1. higher expected loss greater than the risk
2. List and define the three major types of r
Chapter 2 Discussion Questions
1. What is the objective of risk management, and is it consistent with maximization of firm value?
1. Minimize the cost of the risk
1. cost of paying expected loss
2. cost of residual uncertainty: how much uncertainty after
Chapter 20 Discussion Questions
1. Describe the basic model used to determine the value of a firm.
Value of firm= E(NCF1)/(1+k)1 + E(NCF2)/(1+k)2 + E(NCFn)/(1+k)n
cost of capital (k)- the rate of return that investors are demanding to invest in the compan
What are the three basic questions that must be addressed in identifying property loss exposures?
1. What property do I have?
2. What perils are the property exposed to?
3. What is the
Distinguish between common law and statutory law.
Common law- law that arises out of court cases, becomes a precedent
Statutory law- law that comes out of the legislature
Contrast criminal law and civil law. Include
Describe the system of compensating injured workers prior to the adoption of workers
1800s- common law
1880s- employers liability laws
Limited employers defenses
1910-1948- workers compensation
Explain how products liability law developed over time and describe where it stands
today. Include in your answer an explanation of privity limitation and the impact of the
court cases cited in your text specifically, Ma
Define the limited liability of corporations and explain how it can be viewed as a form of insurance.
a) Stockholders are protected if the company is sued and lost. Suer can only go after the
a. Like an i