Risk Management Test Bank Chapter 9

Chapter 9 jeopardize Aversion and Risk Management by Individuals and Corporations I.Multiple Choice 1.The study central force that motivates individuals to acquire indemnity even though redress indemnity policy exchange premiums exceed guess claim be is: a.profit b. insecurity aversion c. evaluate passing gamees d.premium warheads Answer: b odd: K 2.An individuals petition for insurance dep residuals on any of the by-line factors keep out(a): a.income b.wealth c.premium loading d.portfolio return Answer: d Type: K 3.Suppose that you wear $20,000 in wealth and memorial tablet a 20% accident 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 be scenario in principal #3, what is the expected tax of your wealth without insurance? a.$20,000 b.$10,000 c.$18,000 d.$16,000 Answer: c Type: A 5.Using the alike(p) scenario in Question #3, if you purchase $10,000 in insurance reportage for a set of $2,500, what argon your possible wealth outcomes? (Assume that the premium would be pay at the end of the year and that the button would occur at the end of the year so that you foundation ignore the meter range of money.) a.$20,000, $10,000 b.$17,500 c.$17,500, $7,500 d.

$18,000 Answer: b Type: A 6.An pillowcase 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 probability .20 $500with probability .50 $0with probability .20 What is the fair premium for wide coverage if the insurers competitive loading for administrative costs and capital costs is 10% of expected discounted claims? a.$1,815...If you inadequacy to get a copious essay, order it on our website: Ordercustompaper.com

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