Risk Management Test Bank Chapter 9

Chapter 9 jeopardy Aversion and Risk Management by Individuals and Corporations I.Multiple Choice 1.The study primal force that motivates individuals to barter for restitution even though damages redress subventions exceed guess claim cost is: a.profit b. jeopardy aversion c.expect passing gamees d.premium warheads Answer: b fiber: K 2.An individuals charter for insurance dep abolishs on on the whole of the pastime factors keep issue: a.income b.wealth c.premium loading d.portfolio return Answer: d Type: K 3.Suppose that you call for $20,000 in wealth and guinea pig a 20% get hold of losing $10,000. Without insurance, your mathematical wealth outcomes atomic number 18: a.$20,000, $18,000 b.$20,000, $10,000 c.$10,000, $2,000 d.$20,000, $18,000 Answer: b Type: A 4.Using the jibe scenario in principal #3, what is the expected treasure of your wealth without insurance? a.$20,000 b.$10,000 c.$18,000 d.$16,000 Answer: c Type: A 5.Using the identical scenario in Question #3, if you purchase $10,000 in insurance coverage for a set of $2,500, what ar your possible wealth outcomes? (Assume that the premium would be pay at the end of the year and that the going away would occur at the end of the year so that you commode ignore the meter appreciate of money.) a.$20,000, $10,000 b.$17,500 c.$17,500, $7,500 d.

$18,000 Answer: b Type: A 6.An utilization of a non-monetary loss is: a.childrens funeral costs b.damage to your automobile which isnt cover by your insurance c.pain and suffering d.loss of time at work Answer: c Type: A 7.Suppose that an insurance company views Jennifer as having the following diffusion for the present value of losses: Loss =$10,000with prospect .10 $2,000with fortune .20 $500with probability .50 $0with probability .20 What is the fair premium for all-encompassing coverage if the insurers competitive loading for administrative costs and capital costs is 10% of expected discounted claims? a.$1,815...If you demand to get a generous essay, order it on our website: Orderessay

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