Question

26.Glasgow Tech. is a highly leveraged corporation. What does this mean?

Select one:

a. Glasgow Corporation has numerous risk exposures due to operations all over the world.

b. Glasgow Corporation has taken many loans to finance its operations.

c. Glasgow Corporation has financed its operations by itself and has not taken any loans.

d. Glasgow Corporation has a very high P/E ratio.

e. Glasgow Corporation has to receive huge amounts of money they owe (accounts receivables).

27.The insurer cannot replace sentimental value or bear the psychological cost of a loss. The death of a loved one can cause almost unbearable mental suffering that is in no way relieved by receiving a sum of money from the insurer. Because these noneconomic risks create uncertainty, it is apparent that:

Select one:

a. large insurers do not have an edge over small insurers.

b. insurance is not required.

c. insurers should pay for the claims in financial and nonfinancial terms.

d. insureds need not take an insurance policy.

e. insurance cannot completely eliminate uncertainty.

28.Which of the following statements is true about homeowners policy?

Select one:

a. They differ from automobile policies because they combine several types of coverage into one policy.

b. They are a combination of property and liability insurance.

c. They do not provide health insurance for guests and residence employees.

d. The persons insured are similar from coverage to coverage and place to place.

e. They provide narrower coverage in comparison to policies bought individually.

29.Which of the following explains the movement of insurance prices through time?

Select one:

a. Actuarial cycle

b. Redlining cycle

c. Underwriting cycle

d. Demutualization

e. Amortization cycle

30.Which of the following statements is true about the risk metrics?

Select one:

a. It allows us to measure risk, giving us an ability to control risk and simultaneously exploit opportunities as they arise.

b. It is a system of related measures that help us measure the emotional aspects of risk.

c. It is important but not critical because enterprises have alternative measures to see whether they have reached risk management objectives.

d. It is an independent entity and can stand alone.

e. The risk being considered in a particular situation does not dictate the risk measure used because they are standard for almost all risk types.

Answer 1

Answer 26

b. Glasgow Corporation has taken many loans to finance its operations.

Optuin b is the correct answer

Answer 30

c. It is important but not critical because enterprises have alternative measures to see whether they have reached risk management objectives.

Option c is the correct anwer

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