Finance

Melanie was just hired as the risk manager of JKL Company. The company

Melanie was just hired as the risk manager of JKL Company. The company president asked her to make a thorough review of all of the company’s loss exposures. Melanie noted that many employees were too heavily invested in stock issued by the company in their 401-k plan. Melanie suggested that the employees change some of […]

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Date: September 19th, 2020

RST Company has production facilities in Salt Lake City and Cleveland.

RST Company has production facilities in Salt Lake City and Cleveland. The probability that in any given year a fire will damage the production facility in Salt Lake City is 5 percent. The probability that in any given year a fire will damage the Cleveland production facility is 4 percent. What is the probability that […]

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Date: September 19th, 2020

A college professor stores class grading records on a spreadsheet on h

A college professor stores class grading records on a spreadsheet on her office computer. Each time she updates a grading file she makes a printout and a backup copy of the grading file. The professor is using which risk management method to address the risk of losing her class grading records? A) risk avoidance B) […]

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Date: September 19th, 2020

A large property and liability insurance company merged with a bank an

A large property and liability insurance company merged with a bank and then acquired a stock brokerage company. This type of merger and acquisition activity is categorized as A) insurance company consolidation. B) cross-industry consolidation. C) financial risk management. D) insurance brokerage consolidation.     ANSWER Answer: B

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Date: September 19th, 2020

A U.S. athletic equipment company has production plants in several Pac

A U.S. athletic equipment company has production plants in several Pacific Rim countries. Each plant is divided into separate production areas using six-foot thick concrete walls. The construction method is designed to prevent fire from spreading from one production area to another. Using thick concrete walls so that fire does not spread to another production […]

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Date: September 19th, 2020

A comprehensive risk management program that addresses an organization

A comprehensive risk management program that addresses an organization’s pure risks, speculative risks, strategic risks, and operational risks is called a(n) A) risk management information system. B) financial risk management plan. C) speculative risk management plan. D) enterprise risk management plan.     ANSWER Answer: D

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Date: September 19th, 2020

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