True/False. (2 points each) Write “T” if the statement is true and “F” if the statement is false
1. There are 4 corporate levels of Risk Management. ____
2. Subjective risk does not refer to the mental state of someone who experiences doubt as to the outcome of a given event. ____
3. Objective Risk= Probable variation of actual from expected losses
Expected Losses ____
4. Pure risk exists when there is no uncertainty as to whether a loss will occur. ____
5. The principle of subrogation grows out of the principle of indemnity. ____
6. Profits determine the investor’s rate of return. ____
7. Market risk is non-diversifiable risk. ____
8. If I go to a car dealer to see a Mustang, and I end up buying a Taurus this is called the collaborative effect. ____
9. Brainstorming is a quantitative measurement tool. ____
10. All measures with a frequency-reduction focus are called pre-loss activities.
Multiple Choice (3 points each). Choose the one alternative that best completes the statement or answers the question.
11. Which of the following is an example of loss control
c) Reserve Funds
d) All of the above
12. Which of the following types of risk is diversifiable?
a) Company Risk b) Betagenic Risk
c) Market Risk d) All of the above
13. Which of the following does not describe shareholder diversification?
a) Insurance Companies b) Stock Market
c) SBUs d) All of the above
14. Which of the following is part of the Wrapped Model?
a) Strategic Wrapper b) Synergy Wrapper
c) Planning Wrapper d) Insurance Wrapper
15. Problems of MNCs include:
a) Global Control b) Cash management & positioning of funds
c) Managing Receivables d) All of the above
16. Which of the following is not a step in the risk management decision-making process?
a) Identify all significant risk that can cause loss
b) Evaluate the potential frequency and severity of loss
c) Understanding shareholder wealth
d) Implement the risk management methods chosen