Consolidation in the insurance industry is a continuing trend. One area where mergers and acquisitions frequently occur is between marketing intermediaries who represent insurance purchasers. These intermediaries are called A) insurance adjusters. B) insurance agents. C) insurance underwriters. D) insurance brokers. ANSWER Answer: D
The process of determining which set of investments in plant and equipment to undertake is called A) regression analysis. B) loss forecasting. C) time value of money analysis D) capital budgeting. ANSWER Answer: D
A computerized data base that permits risk managers to store and analyze risk management data is called a A) risk management information system. B) risk management Intranet. C) risk management web site. D) risk map. ANSWER Answer: A
Millie is risk manager of JKL Company. She is considering an investment in a loss control project. The project will cost $40,000. Assuming a 10 percent discount rate, the present value of the future net cash flows that this project will generate is $60,000. What is the net present value (NPV) of this project? A) […]
Which of the following statements is (are) true with regard to the use of technology in risk management programs? I. Risk management Intranets are networks intended for an internal audience. II. Risk management information systems can be used to store and track workers compensation claims data. A) I only B) II only C) both I […]
A grid charting the potential frequency and severity of losses is called a A) risk management information system. B) risk management Intranet. C) risk management web site. D) risk map. ANSWER Answer: D
Which of the following was a consequence of passage of the Financial Modernization Act (Gramm-Leach-Bliley)? A) Formation of insurers was made easier because capital requirements were reduced. B) It became easier for insurers to conduct business as they were no longer required to be licensed in each state where they operate, but only in the […]
Terrorists attacked the World Trade Center on September 11, 2001. The attack simultaneously created large losses for life insurers, property insurers, workers compensation insurers, health insurers, and liability insurers. What name is given to an event that simultaneously creates large losses in several lines of insurance? A) speculative loss B) clash loss C) retroactive loss […]
Two buildings are located close together at a production facility. The probability that either of these buildings will experience a fire loss is 4 percent. However, if one building has a fire, the probability that the second building will have a fire is 60 percent. What is the probability that both buildings will have a […]
The transfer of insurable risk to the capital markets through the creation of a financial instrument is called A) coefficient of risk. B) securitization of risk. C) financial risk management. D) enterprise risk management. ANSWER Answer: B
