NEW
Font size
Worksheets31-40 chương 4
Total questions: 10
Worksheet time: 5mins
Terrorists attacked the World Trade Center on September 11, 2001. The attack simultaneouslycreated large losses for life insurers, property insurers, workers compensation insurers, healthinsurers, and liability insurers. What name is given to an event that simultaneously createslarge losses in several lines of insurance?
speculative loss
clash loss
retroactive loss
consequential loss
Which of the following was a consequence of passage of the Financial Modernization Act(Gramm-Leach-Bliley)?
Formation of insurers was made easier because capital requirements were reduced.
It became easier for insurers to conduct business as they were no longer required tobe licensed in each state where they operate, but only in the state where they aredomiciled.
Insurers were required to prepare financial statements using generally acceptedaccounting principles (GAAP) instead of using statutory accounting.
Depression-era barriers between underwriting risk, depository functions, andsecurities underwriting were eliminated.
The transfer of insurable risk to the capital markets through the creation of a financialinstrument is called
coefficient of risk.
securitization of risk.
financial risk management.
enterprise risk management.
LMN Insurance Company is concerned about its exposure to hurricane losses for property risksit insured on the Gulf Coast. LMN borrowed money from investors by issuing financialsecurities. LMN promised to repay the money it borrowed with interest if hurricane losses donot exceed a specified level. If hurricane losses exceed the specified level, LMN will repay lessthan it borrowed and use the extra money to fund hurricane losses. The securities that LMNissued are
call options.
futures contracts.
weather options.
catastrophe bonds.
Hedge Fund Company offers a mutual fund to investors. Fund managers are concerned aboutfund volatility. They analyzed the fund to determine the worst loss likely to occur in a calendarquarter, assuming a 90 percent level of confidence. The worst probable loss is known as thefund's
unrealized capital gain.
value at risk.
beta coefficient.
surrender value.
Reasons to adopt an enterprise risk management plan include all of the following EXCEPT
to increase earnings volatility.
to treat risks facing the business in a more holistic way.
to increase net income.
to gain an advantage over competitors.
Which of the following statements concerning the securitization of risk is (are) true?
1. Securitization increases the capacity of the insurance industry.
2. Securitization can be used to protect against catastrophic loss.
I only
II only
both I and II
neither I nor II
Insurance Brokerage Company uses a computer-based method of estimating the losses itsclients will suffer if a severe storm or earthquake occurs. This method of estimating losses iscalled
capital budgeting.
securitization of risk.
risk mapping.
catastrophe modeling.
Uncertainty pertaining to the organization's goals and objectives and the organization'sstrengths, weaknesses, opportunities, and threats is called
operational risk.
strategic risk.
subjective risk.
pure risk.
Consolidation in the insurance industry is a continuing trend. One area where mergers andacquisitions frequently occur is between marketing intermediaries who represent insurancepurchasers. These intermediaries are called
insurance adjusters.
insurance agents.
insurance underwriters.
insurance brokers.
