Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FIN 331 > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

Pure risk

A

Something that will only generate a loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Speculative risk

A

There can be either a gain or a loss (betting/stocks)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Static risk

A

Low change in the rate of the risk (cold/flu season)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Dynamic risk

A

High fluctuation in the rate of the risk (California fires)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Objective risk

A

Risk that can be quantified (Rebuilding of a house)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Subjective risk

A

Risk that cannot be quantified (Stress)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Fundamental risk

A

Risks that affect a large part of the population

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Particular risk

A

Risks that affect an individual/organization (Car accident)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Peril

A

Something that may cause a loss (fire, wind, floods, etc . )

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Hazard

A

Something that makes a peril more likely to occur (ice on the roads)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Moral hazard

A

A person who purposefully wishes to cause a loss through dishonesty (lighting a house on fire)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Morale hazard

A

A person who is indifferent about a loss or careless about a loss (driving like Andreas)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How do you manage risks?

A

Identify the risks then develop a risk management plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Risk management plan steps

A

Step 1: Identifying risks (most important step) – Figuring out what risks there are
Step 2: Evaluating for loss – Figuring out loss likelihood and loss severity
Step 3: Develop a risk management plan – Assign specific actions to each risk
Step 4: Implement the risk management plan – Carry out risk management plan
Step 5: Administering the plan and revising as necessary – Make sure the steps are carried out correctly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Loss avoidance

A

Completely avoiding a loss (don’t go bungee jumping if you don’t want to die from bungee jumping)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Loss control/prevention/reduction

A

Prior to the loss - wearing seatbelts or driving safely

During the loss - During a disaster, how do you handle it best

After the loss - Making sure the property is preserved

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Retaining the risk

A

Planned risk, unplanned risk, total risk, and partial risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Planned risk

A

Understand and accept the risk (driving)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Unplanned risk

A

Liable for a risk, but don’t know you are incurring the risk (someone falling on ice on the sidewalk outside of your house)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Total risk

A

Take on all the risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Partial risk

A

Take on part of the risk (having insurance with a deductible)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Transferring the risk

A

Taking something of risk and transferring it to someone else (Insurance, waivers, hold harmless agreements, and stop losses)

23
Q

Implementing the plan

A

Carry out the plan

24
Q

Administer the plan

A

Risks change, so you must adapt to the new risks that are presented

25
Q

The law of large numbers

A

the principle holds that the average of a large number of independent identically distributed random variables tends to fall close to the expected value. This result can be used to show that the entry of additional risks to an insured pool tends to reduce the variation of the average loss per policyholder around the expected value.

26
Q

Insurer

A

Company, policy issuer, or seller

27
Q

Insured

A

Owner, policy holder, or the buyer

28
Q

Intentional tort

A

Injury/wrong against another party. Must be on purpose (threat, assault, fraud, or trespassing)

29
Q

Unintentional tort

A

Injury/wrong against another party. NOT on purpose (Someone falling on GVSU’s campus)

30
Q

ORPMAN

A

What would an ordinary, responsible, and prudent person do in a situation

31
Q

Subrogation

A

Allows insurance companies to sue to recover their damages (in a car accident, the at fault insurance company gets sued by the non-at fault insurance company)

32
Q

Liability damages

A

Monetary, physical, emotional

33
Q

Real property

A

Any land and anything permanently attached to the land (house)

34
Q

Physical property

A

Anything that would not be real property (phone, car, watch)

35
Q

Expenses at death

A

Direct (funeral costs, debts, or probate costs - mostly legal fees)
JTWROS - Joint Tenants With Rights of Survivorship
TIC - Tenants In Common
POD - Payable on Death

36
Q

Most frequent causes of death

A

Heart disease and cancer

37
Q

When does insurance work best?

A

When the potential losses are huge

38
Q

Principle of indemnity

A

When you have a loss, you cannot collect more than what the loss is worth

Valued insurance - You get whatever the property is valued at (life insurance)

39
Q

Utmost good faith

A

There is a higher degree of honesty in a life/health insurance contract than a regular business contract

40
Q

Valued insurance policies

A

You get whatever the property is valued at (life insurance)

41
Q

Aleatory contracts

A

Two parts of the contract are not equal (a $10 insurance policy paying out $1,000,000)

42
Q

Unilateral contracts

A

Only the insurance company has to keep its promises, you don’t (you can back out of the contract whenever you want, they cannot)

43
Q

Burdens of risk on society

A

Expenditures to reduce risk (flood insurance, higher retention walls)

Conforming to the government (following OSHA)

Lost opportunities (worry about risk)

Expenditures of future losses

Cost of the losses

44
Q

How much of each paycheck goes to Social Security?

A

7.65% total

45
Q

RMIS stands for

A

Risk Management Information Systems

46
Q

Percent of pre-retirement income needed in retirement

A

80-85% of income

47
Q

CSO mortality tables

A

Show when most people are going to die by, based on their habits and tendencies

48
Q

Insurable losses

A

I can collect on the insured loss if I have insurance.

Someone steals my computer, I cannot collect on it because I don’t have insurance, but if I did, I could

49
Q

When does an insurance application become valid?

A

When there is offer and acceptance, when money is paid, and the policy is returned to the insurer when it is postmarked

50
Q

Common things in business contracts

A

Exchange of consideration

51
Q

Uncertainty

A

The inability to make a defensible estimate of a future outcome. If the probability of a loss cannot be estimated, it is uncertain

52
Q

Enterprise risk management

A

An integrated, uniform approach to risk management, Its purpose is to help ensure a uniform approach to identifying risks, measuring them, prioritizing them, and implementing them

53
Q

Lifestyle in retirement

A

Most have two homes, want to travel more, eat out more, give away more, and have much higher medical expenses

54
Q

Who does not have the legal capacity to enter into a contract

A

Cannot be minors, cannot be drunk or under the influence, cannot be mentally handicapped, and individuals who don’t have the authority to act on behalf of someone else

FIN 331 (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions