chapter 1 Risk & Insurance

What are the types of probabilities theories?

• Monetary risk and non-monetary risk

• Judgemental probability

• Speculative risk and pure risk

• Fundamental risk and particular risk

What is the definition of risk?

• A condition with no uncertainty about the outcome

• A situation with no possibility of loss

• A condition in which there is a possibility of adverse deviation from a desired outcome

• A situation where the outcome is always favorable

What is the concept of hazard?

• A situation with no possibility of loss

• A physical condition that increases the chance of loss

• A character defect in an individual that increases the chance of loss

• A condition that increases the chance of profit

When is judgemental probability used in predicting future losses?

• When the future outcomes can be partially controlled

• When the future outcomes always result in loss

• When the future outcomes cannot be controlled

• When the future outcomes always result in profit

Define the risk of premature death.

• The risk of being injured

• The risk of living a long life

• The risk of dying before the expected age

• The risk of losing a loved one

What is the concept of pure risk?

• A situation with only possibility of loss

• A situation with possibility of loss or no loss

• A situation with only possibility of profit

• A situation with no possibility of loss

What are personal risks related to?

• Risks related to liability

• Risks related to health and unemployment

• Risks related to financial loss

• Risks related to property damage

What is the definition of direct loss?

• A situation with no possibility of loss

• Extra costs incurred as a result of the loss

• Loss in consequence of a direct loss

• Damage to property by a peril

What are the types of probabilities theories?

• Monetary risk and non-monetary risk

• Judgemental probability and statistical probability

• Speculative risk and pure risk

• Fundamental risk and particular risk

What is the concept of loss?

• A condition that increases the chance of loss

• A physical condition that increases the chance of loss

• A possibility of unfortunate occurrence

• A reduction or disappearance of economic value