Chapter Exam Flashcards
1
Q
Insurance represents the process of risk
A
Transference
2
Q
People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called
A
Adverse selection
3
Q
Which of the following is considered to be an event or condition that increases the probability of an insured’s loss?
A
Hazard
4
Q
An individual who removes the risk of losing money in the stock market by never purchasing stocks is said to be engaging in
A
Risk avoidance
5
Q
The cause of a loss is referred to as a(n)
A
Peril
6
Q
All of the following are examples of pure risk EXCEPT
A
Losing money at a casino
7
Q
Insurance companies determine risk exposure by which or the following
A
Law of large numbers and risk pooling
