瑞达 Rejda 保险教材英文练习题04.doc

Principles of Risk Management and Insurance, 11e (Rejda)Chapter 4 Advanced Topics in Risk Management1) All of the following are financial risks which may be faced by business organizations EXCEPTA) interest rate risk.B) commodity price risk.C) product liability risk.D) currency exchange rate risk.Answer: CQuestion Status: Previous Edition2) Which of the following statements about the scope of risk management is (are) true?I.Traditionally, risk management was limited in scope to speculative loss exposures.II.In the 1990s, some businesses began to expand the scope of risk management to include financial risks.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: BQuestion Status: Previous Edition3) Mid-States Beef is a commercial feedlot business. Currently, the company has over 10,000 cattle in feedlots. Mid-States is concerned that the price of corn, the grain fed to the cattle, will increase significantly. The risk that the price of corn may increase and harm the profitability of Mid-States Beefs operations is a(n)A) currency exchange rate risk.B) property risk.C) commodity price risk.D) interest rate risk.Answer: CQuestion Status: Previous Edition4) An integrated risk management program is a risk management program which combinesA) pure and speculative risks.B) property and liability risks.C) personnel-related risk and property risk. D) direct and indirect loss risk. Answer: AQuestion Status: Previous Edition5) Regional Airline (RA) spends millions of dollars each year on jet fuel. The company also has significant liability exposures. RA can retain a large portion of its liability exposure if fuel costs are low. The company can pay high fuel costs if retained liability losses are low. RA cannot, however, absorb both high fuel costs and high retained liability claims. RAs insurer designed an insurance program where the insurer pays only if both contingencies (high fuel costs and high retained liability claims) occur. The contract the insurer designed is called a(n)A) double indemnity rider.B) double trigger option.C) multiple protection policy.D) other insurance provision.Answer: BQuestion Status: Revised6) Which statement is (are) true with respect to enterprise risk management programs?I.They address traditional property, liability, and personnel loss exposures.II.They do not address financial risks.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: AQuestion Status: Previous Edition7) A comprehensive risk management program that addresses an organizations pure risks, speculative risks, strategic risks, and operational risks is called a(n)A) risk management information system.B) financial risk management plan.C) speculative risk management plan.D) enterprise risk management plan.Answer: DQuestion Status: Previous Edition8) The property and liability insurance industry is characterized by a repetitive pattern of loose underwriting standards with low premiums followed by tight underwriting standards with high premiums. This repetitive pattern is called theA) underwriting by exception method.B) business cycle.C) underwriting cycle.D) account underwriting method.Answer: CQuestion Status: Previous Edition9) Which statement is (are) true regarding property and liability insurance market conditions?I.Premiums are high when the insurance market is hard.II.Underwriting standards are tight when the insurance market is soft.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: AQuestion Status: Previous Edition10) Which of the following statements is true regarding insurance market conditions and underwriting results?A) A combined ratio greater than one (or 100 percent) indicates profitable underwriting.B) In a soft insurance market, more retention is used than in a hard insurance market.C) Insurance rates are high and underwriting standards are tight when the insurance market is hard.D) Property and liability insurance premiums and underwriting standards do not fluctuate over time.Answer: CQuestion Status: Previous Edition11) The relative level of surplus in the insurance industry is called the industrysA) capacity.B) liabilities.C) reserves.D) admitted assets.Answer: AQuestion Status: Previous Edition12) Which of the following statements is (are) true regarding investment returns and the underwriting cycle?I.Investment returns have no impact upon the underwriting cycle.II.Investment returns can lengthen the duration of a soft market by offsetting underwriting losses.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: BQuestion Status: Previous Edition13) A large property and liability insurance company merged with a bank and then acquired a stock brokerage company. This type of merger and acquisition activity is categorized asA) insurance company consolidation.B) cross-industry consolidation.C) financial risk management.D) insurance brokerage consolidation.Answer: BQuestion Status: Previous Edition14) A company has a fleet of 200 vehicles. On average, 50 vehicles per year experience property damage. What is the probability that any vehicle will be damaged in any given year?A) 10 percentB) 20 percentC) 25 percentD) 50 percentAnswer: CQuestion Status: Revised15) RST Company has production facilities in Salt Lake City and Cleveland. The probability that in any given year a fire will damage the production facility in Salt Lake City is 5 percent. The probability that in any given year a fire will damage the Cleveland production facility is 4 percent. What is the probability that BOTH production facilities will be damaged by fire in any given year?A) 0.20 percentB) 2.00 percentC) 4.50 percentD) 9.00 percentAnswer: AQuestion Status: Previous Edition16) RST Company has production facilities in Salt Lake City and Cleveland. The probability that in any given year a fire will damage the production facility in Salt Lake City is 5 percent. The probability that in any given year a fire will damage the Cleveland production facility is 4 percent. What is the probability that AT LEAST ONE of the production facilities will be damaged by fire in any given year?A) 0.20 percentB) 2.00 percentC) 8.80 percentD) 9.00 percentAnswer: CQuestion Status: Previous Edition17) Some events cannot occur together because the occurrence of one event makes the occurrence of the second event impossible. Such events are calledA) dependent events.B) independent events.C) conditional events.D) mutually exclusive events.Answer: DQuestion Status: Previous Edition18) Two buildings are located close together at a production facility. The probability that either of these buildings will experience a fire loss is 4 percent. However, if one building has a fire, the probability that the second building will have a fire is 60 percent. What is the probability that both buildings will have a fire?A) 1.6 percentB) 2.4 percentC) 8.0 percentD) 64.0 percentAnswer: BQuestion Status: Previous Edition19) Which of the following statements is (are) true with regard to probability analysis?I.If two events are independent, the occurrence of one event does not affect the occurrence of the second event.II.If two events are dependent, the occurrence of one event affects the occurrence of the second event.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: CQuestion Status: Previous Edition20) Jane is risk manager of ABC Manufacturing Company. She is trying to decide whether to self-insure her companys workers compensation exposure or to purchase insurance. Jane would like to use regression analysis to predict the number of workers compensation claims that will occur next year. The number of claims will be the dependent variable in the regression. All of the following would be reasonable independent variables to use EXCEPTA) number of employees.B) number of hours worked.C) total assets.D) payroll.Answer: CQuestion Status: Previous Edition21) A method of characterizing the relationship between two or more variables and then using the characterization to make a prediction is calledA) loss analysis.B) time value of money analysis.C) regression analysis.D) capital budgeting analysis.Answer: CQuestion Status: Previous Edition22) A table showing losses that could occur and the corresponding chance that each loss could occur is called anA) underwriting cycle.B) capital budget.C) loss distribution.D) risk map.Answer: CQuestion Status: Previous Edition23) Which of the following statements is (are) true with respect to the time value of money?I.Money received today is worth more than the same amount of money received in the future.II.The present value of a future amount is greater than the future amount.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: AQuestion Status: Previous Edition24) Calculating the present value of a future amount is calledA) interpolating.B) discounting.C) compounding.D) regression analysis.Answer: BQuestion Status: Previous Edition25) The process of determining which set of investments in plant and equipment to undertake is calledA) regression analysis.B) loss forecasting.C) time value of money analysisD) capital budgeting.Answer: DQuestion Status: Revised26) Which of the following statements is (are) true regarding the net present value of a capital investment?I.Net present value does not consider time value of money.II.A positive net present value represents an increase in value to the firm.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: BQuestion Status: Previous Edition27) Millie is risk manager of JKL Company. She is considering an investment in a loss control project. The project will cost $40,000. Assuming a 10 percent discount rate, the present value of the future cash flows that this project will generate is $60,000. What is the net present value (NPV) of this project?A) $20,000B) $26,000C) $60,000D) $100,000Answer: AQuestion Status: Previous Edition28) A computerized data base that permits risk managers to store and analyze risk management data is called aA) risk management information system.B) risk management Intranet.C) risk management web site.D) risk map.Answer: AQuestion Status: Previous Edition29) A grid charting the potential frequency and severity of losses is called aA) risk management information system.B) risk management Intranet.C) risk management web site.D) risk map.Answer: DQuestion Status: Previous Edition30) Which of the following statements is (are) true with regard to the use of technology in risk management programs?I.Risk management Intranets are networks intended for an internal audience.II.Risk management information systems can be used to store and track workers compensation claims data.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: CQuestion Status: Revised31) Terrorists attacked the World Trade Center on September 11, 2001. The attack simultaneously created large losses for life insurers, property insurers, workers compensation insurers, health insurers, and liability insurers. What name is given to an event that simultaneously creates large losses in several lines of insurance?A) speculative lossB) clash lossC) retroactive lossD) consequential lossAnswer: BQuestion Status: Previous Edition32) Which of the following was a consequence of passage of the Financial Modernization Act (Gramm-Leach-Bliley)?A) Formation of insurers was made easier because capital requirements were reduced.B) It became easier for insurers to conduct business as they were no longer required to be licensed in each state where they operate, but only in the state where they are domiciled.C) Insurers were required to prepare financial statements using generally accepted accounting principles (GAAP) instead of using statutory accounting.D) Depression-era barriers between underwriting risk, depository functions, and securities underwriting were eliminated.Answer: DQuestion Status: Previous Edition33) The transfer of insurable risk to the capital markets through the creation of a financial instrument is calledA) coefficient of risk.B) securitization of risk.C) financial risk management.D) enterprise risk management.Answer: BQuestion Status: Previous Edition34) LMN Insurance Company is concerned about its exposure to hurricane losses for property risks it insured on the Gulf Coast. LMN borrowed money from investors by issuing financial securities. LMN promised to repay the money it borrowed with interest if hurricane losses do not exceed a specified level. If hurricane losses exceed the specified level, LMN will repay less than it borrowed and use the extra money to fund hurricane losses. The securities that LMN issued areA) call options.B) futures contracts.C) weather options.D) catastrophe bonds.Answer: DQuestion Status: Previous Edition35) Hedge Fund Company offers a mutual fund to investors. Fund managers are concerned about fund volatility. They analyzed the fund to determine the worst loss likely to occur in a calendar quarter, assuming a 90 percent level of confidence. The worst probable loss is known as the fundsA) unrealized capital gain.B) value at risk.C) beta coefficient.D) surrender value.Answer: BQuestion Status: Previous Edition36) Reasons to adopt an enterprise risk management plan include all of the following EXCEPTA) to increase earnings volatility.B) to treat risks facing the business in a more holistic way.C) to increase net income.D) to gain an advantage over competitors.Answer: AQuestion Status: Previous Edition37) Which of the following statements concerning the securitization of risk is (are) true?I.Securitization increases the capacity of the insurance industry.II.Securitization can be used to protect against catastrophic loss.A) I onlyB) II onlyC) both I and IID) neither I nor IIAnswer: CQuestion Status: Previous Edition38) Insurance Brokerage Company uses a computer-based method of estimating the losses its clients will suffer if a severe storm or earthquake occurs. This method of estimating losses is called A) capital budgeting. B) securitization of risk. C) risk mapping. D) catastrophe modeling. Answer: DQuestion Status: Revised39) Uncertainty pertaining to the organizations goals and objectives and the organizations strengths, weaknesses, opportunities, and threats is calledA) operational risk. B) strategic risk. C) subjective risk. D) pure risk. Answer: BQuestion Status: Previous Edition40) Consolidation in the insurance industry is a continuing trend. One area where mergers and acquisitions frequently occur is between marketing intermediaries who represent insurance purchasers. These intermediaries are calledA) insurance adjusters.B) insurance agents. C) insurance underwriters.D) insurance brokers.Answer: DQuestion Status: Previous Edition41) Two Below Zero is a new ski resort in Colorado. Two Below Zero is concerned that an abnormally warm winter will prevent the accumulation of snow needed to have a profitable ski season. Two Below Zero purchased a contract that will pay Two Below Zero a lump sum payment if the daily high temperature exceeds 30 degrees for more than 12 days between January 1st and March 31st. The contract Two Below Zero purchased is called a(n)A) catastrophe bond.B) weather derivative.C) interest rate swap.D) convertible bond.Answer