Principles of Risk Management and Insurance 13th edition by George Rejda test bank

Answer:  D
Question Status:  Previous Edition
 
55) Rapid inflation, cyclical unemployment, war, hurricanes, and floods are all examples of
A) diversifiable risks.
B) physical hazards.
C) nondiversifiable risks.
D) speculative risks.
Answer:  C
Question Status:  Previous Edition
 
56) Five years ago, Shannon decided to start investing monthly in the common stock of ABC Telecom Company. Her financial well-being will be harmed if the price of ABC Telecom stock drops significantly. The risk of investment loss can be reduced if she invests in other companies and other types of financial assets. The risk Shannon faces with regard to her investments is a(n)
A) enterprise risk.
B) diversifiable risk.
C) pure risk.
D) nondiversifiable risk.
Answer:  B
Question Status:  Previous Edition
 
57) Frazier Electric keeps a paper copy of business records at the company’s headquarters. The company also has two back-up copies of business records stored in electronic files. The electronic files are kept in the event the paper records are damaged or destroyed. The back-up files illustrate which of the following risk control techniques?
A) loss prevention
B) loss reduction
C) diversification
D) duplication
Answer:  D
Question Status:  New

58) Rather than storing all of its finished goods in a single location, Davis Company divides the finished goods between two warehouses. This simple risk control technique which is designed to limit losses should a warehouse fire occur is called
A) duplication.  
B) risk transfer.
C) separation.  
D) loss prevention.  
Answer:  C
Question Status:  New
59) Some members of Congress are concerned that if one or two large U.S. banks fail, it could lead to the collapse of the entire U.S. financial sector. This risk is called
A) objective risk.   
B) systemic risk.  
C) enterprise risk.   
D) subjective risk.   
Answer:  B
Question Status:  New