1. Which of the following have led to a growing interest in risk management?
a. The terrorist attacks of September 11, 2001
b. Corporations that filed fraudulent financial statements that overstated earnings
c. Shrinking wages and employee benefit plans during the 2008 recession
d. All of the above
2. Auto collision claims are an example of which of the following?
a. Pure risks that can be diversified across a large group of drivers
b. Speculative risks than can be diversified across a large group of drivers
c . P ure risks that cannot be diversified across a large group of drivers
d. Speculative risks that cannot be diversified across a large group of drivers
3. Which of the following is not a speculative risk?
a. An investor who invests in common stock
b. An entrepreneur who starts a new company
c. A business that develops a new product line
d. A lawsuit filed against a firm by a client who slips on the firm’s icy steps
4. Risk aversion . . . I . is the tendency of a person to prefer less risk i nstead of more risk when faced with risky decisions. II. is a more appropriate strategy for pure risks than for speculative risks
. a. I only b. II only c. both I and II d. neither I nor II 5. Which of the following statements about insurance is correct? a. Insurance is available in all countries across the world.
b. Insurance is a common technique used by individuals to protect against risk.
c. Private insurance is available for non- diversifiable risks like unemployment.
d. a and b are correct e. b and c are correct
6. Which of the following statements about employee benefits are correct?
I. Workers are granted favorable tax treatment on the employee benefits that they receive from their employers.
II. Employee benefits account for over half of the compensation paid by employers in the United States.
a. I only
b. II only
c. both I
d. neither I nor II
7. W hich of the following is a step in the risk m anagement process?
a. Identifying all possible sources of financial loss
b. Setting the goals of the risk management program
c. Choosing the most efficient ways to handle the firm’s loss exposures
d. Measuring the frequency and severity of all loss exposures
e. All of the above
8 . T he owner of a building inserts a provision in its lease that makes its tenant legally responsible for clear- ing snow and ice from the building’s sidewalks. This provision is an example of which of the following?
a. Loss prevention b. Loss reduction
c. Loss transfer d. Self-insurance
9. ACA is a leading global automaker. ACA has to stop production of a popular vehicle when a labor strike
