WorksheetsTUTORIAL 1 - WEEK 2 (ASC173)
Total questions: 10
Worksheet time: 8mins
An earthquake is an example of
A) a moral hazard.
B) a peril.
C) a physical hazard.
D) an objective risk.
A peril is
A) a moral hazard.
B) the cause of a loss.
C) a condition which increases the chance of a loss.
D) the probability that a loss will occur.
Uncertainty based on a person's mental condition or state of mind is known as
A) objective risk.
B) subjective risk.
C) objective probability.
D) subjective probability.
Objective risk is defined as
A) the probability of loss.
B) the relative variation of actual loss from expected loss.
C) uncertainty based on a person's mental condition or state of mind.
D) the cause of loss.
From the viewpoint of the insurer, all of the following are characteristics of an ideally insurable risk EXCEPT
A) The loss must be accidental.
B) The loss should be catastrophic.
C) The premium must be economically feasible.
D) There must be a large number of exposure units.
Following good health habits can be categorized as
A) loss prevention.
B) risk retention.
C) noninsurance transfer.
D) personal insurance.
Which of the following is implied by the pooling of losses?
A) sharing of losses by an entire group
B) inability to predict losses with any degree of accuracy
C) substitution of actual loss for average loss
D) increase of objective risk
Which of the following is a characteristic of insurance?
A) pooling of losses
B) avoidance of risk
C) payment of intentional losses
D) certainty about specific losses that will occur
According to the law of large numbers, what happens as the number of exposure units increases?
A) Actual results will increasingly differ from probable results.
B) Actual results will more closely approach probable results.
C) Nondiversifiable risk will decrease.
D) Objective risk will increase.
The use of fire-resistive materials when constructing a building is an example of
A) risk transfer.
B) risk control.
C) risk avoidance.
D) risk retention.
