Finance

Regional Airline (RA) spends millions of dollars each year on jet fuel

Regional Airline (RA) spends millions of dollars each year on jet fuel. The company also has significant liability exposures. RA can retain a large portion of its liability exposure if fuel costs are low. The company can pay high fuel costs if retained liability losses are low. RA cannot, however, absorb both high fuel costs […]

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Date: September 19th, 2020

Which of the following statements about the scope of risk management i

Which of the following statements about the scope of risk management is (are) true? I. Traditionally, risk management was limited in scope to speculative loss exposures. II. In the 1990s, some businesses began to expand the scope of risk management to include financial risks. A) I only B) II only C) both I and II […]

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Date: September 19th, 2020

Mid-States Beef is a commercial feedlot business. Currently, the compa

Mid-States Beef is a commercial feedlot business. Currently, the company has over 10,000 cattle in feedlots. Mid-States is concerned that the price of corn, the grain fed to the cattle, will increase significantly. The risk that the price of corn may increase and harm the profitability of Mid-States Beef’s operations is a(n) A) currency exchange […]

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Date: September 19th, 2020

The property and liability insurance industry is characterized by a re

The property and liability insurance industry is characterized by a repetitive pattern of loose underwriting standards with low premiums followed by tight underwriting standards with high premiums. This repetitive pattern is called the A) underwriting by exception method. B) business cycle. C) underwriting cycle. D) account underwriting method.     ANSWER Answer: C

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Date: September 19th, 2020

Which statement is (are) true regarding property and liability insuran

Which statement is (are) true regarding property and liability insurance market conditions? I. Premiums are high when the insurance market is “hard.” II. Underwriting standards are tight when the insurance market is “soft.” A) I only B) II only C) both I and II D) neither I nor II     ANSWER Answer: A

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Date: September 19th, 2020

Which of the following statements is true regarding insurance market c

Which of the following statements is true regarding insurance market conditions and underwriting results? A) A combined ratio greater than one (or 100 percent) indicates profitable underwriting. B) In a “soft” insurance market, more retention is used than in a “hard” insurance market. C) Insurance rates are high and underwriting standards are tight when the […]

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Date: September 19th, 2020

Which of the following statements is (are) true regarding investment r

Which of the following statements is (are) true regarding investment returns and the underwriting cycle? I. Investment returns have no impact upon the underwriting cycle. II. Investment returns can lengthen the duration of a soft market by offsetting underwriting losses. A) I only B) II only C) both I and II D) neither I nor […]

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Date: September 19th, 2020