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Part 2: Test Item File For Principles of Risk Management and Insurance Eleventh EditionContents Chapter1 RiskinOurSociety..........................................................................................................1Chapter2 InsuranceandRisk.........................................................................................................12Chapter3 IntroductiontoRiskManagement...............................................................................21Chapter4 AdvancedTopicsinRiskManagement......................................................................32Chapter5 TypesofInsurersandMarketingSystems.................................................................43Chapter6 InsuranceCompanyOperations..................................................................................53Chapter7 FinancialOperationsofInsurers..................................................................................63Chapter8 GovernmentRegulationofInsurance.........................................................................74Chapter9 FundamentalLegalPrinciples......................................................................................84Chapter10 AnalysisofInsuranceContracts..................................................................................95Chapter11 LifeInsurance...............................................................................................................104Chapter12 LifeInsuranceContractualProvisions......................................................................117Chapter13 BuyingLifeInsurance..................................................................................................129Chapter14 AnnuitiesandIndividualRetirementAccounts......................................................139Chapter15 IndividualHealthInsuranceCoverages...................................................................149Chapter16 EmployeeBenefits:GroupLifeandHealthInsurance...........................................160Chapter17 EmployeeBenefits:RetirementPlans........................................................................171Chapter18 SocialInsurance............................................................................................................181Chapter19 TheLiabilityRisk.........................................................................................................194Chapter20 HomeownersInsurance,SectionI.............................................................................204Chapter21 HomeownersInsurance,SectionII............................................................................215Chapter22 AutoInsurance.............................................................................................................225Chapter23 AutoInsuranceandSociety........................................................................................236Chapter24 OtherPropertyandLiabilityInsuranceCoverages................................................245Chapter25 CommercialPropertyInsurance................................................................................254Chapter26 CommercialLiabilityInsurance.................................................................................264Chapter27 CrimeInsuranceandSuretyBonds...........................................................................273Chapter1RiskinOurSociety1) Traditionally,riskhasbeendefinedasA) anysituationinwhichtheprobabilityoflossisone.B) anysituationinwhichtheprobabilityoflossiszero.C) uncertaintyconcerningtheoccurrenceofloss.D) theprobabilityofalossoccurring.Answer: CQuestionStatus: PreviousEdition2) ObjectiveriskisdefinedasA) theprobabilityofloss.B) therelativevariationofactuallossfromexpectedloss.C) uncertaintybasedonapersonsmentalconditionorstateofmind.D) thecauseofloss.Answer: BQuestionStatus: PreviousEdition3) Aninsurancecompanyestimatesitsobjectiveriskfor10,000exposurestobe10percent.Assumingtheprobabilityoflossremainsthesame,whatwouldhappentotheobjectiveriskifthenumberofexposuresweretoincreaseto1million?A) Itwoulddecreaseto1percent.B) Itwoulddecreaseto5percent.C) Itwouldremainthesame.D) Itwouldincreaseto20percent.Answer: AQuestionStatus: PreviousEdition4) UncertaintybasedonapersonsmentalconditionorstateofmindisknownasA) objectiverisk.B) subjectiverisk.C) objectiveprobability.D) subjectiveprobability.Answer: BQuestionStatus: PreviousEdition5) Thelong-runrelativefrequencyofaneventbasedontheassumptionofaninfinitenumberofobservationswithnochangeintheunderlyingconditionsiscalledA) objectiveprobability.B) objectiverisk.C) subjectiveprobability.D) subjectiverisk.Answer: AQuestionStatus: PreviousEditionCopyright©2011PearsonEducation,Inc.2Rejda•PrinciplesofRiskManagementandInsurance,EleventhEdition6) Whichofthefollowingstatementsaboutapriori probabilitiesiscorrect?A) Theyaresubjectiveprobabilitiesbasedonambiguityinthewayprobabilityisperceived.B) Theyaresubjectiveprobabilitiesthatmayvaryamongindividualsbecauseoffactorssuchasage,gender,education,andtheuseofalcohol.C) Theyareobjectiveprobabilitiesthat canbedeterminedbydeductivereasoning.D)
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