CPCU 500 Final Practice Test
Which one of the following risk management techniques should be considered when the expected value of the losses from an activity outweighs the expected benefits of that activity
Avoidance
In using the coefficient of variation when comparing two distributions, if both distributions have the same mean, then the distributions with the larger standard deviation will have
Greater variability
In insurance terminology, careless smoking practices are a
Hazard
Which one of the following is an example of a wearable?
Helmets that monitor fatigue
An emperical probability distribution is based on
Historical data
Three risk control techniques can be used effectively to control liability losses. Which one of the following is included among those three techniques
Loss reduction
Separation, duplication, and diversification are considered to be
Loss reduction techniques
Which one of the following is a financial consequence of personnel losses to an organization?
Losses to an organization's value caused by negative publicity
Which one of the following characteristics regarding kidnap and ransom is important for an international organization to consider in assessing personnel loss exposure
Low frequency but high severity
To achieve the financial goal of maximizing market value, most publicly traded organizations should pursue risk financing goals. Common risk financing goals include which one of the following?
Manage uncertainty of loss outcomes
Which one of the following is a risk financing goal?
Managing uncertainty of loss outcomes
To determine which one of the following measures must the value in a data set be arranged by size?
Median
The consensus process by which the veracity of data is confirmed and verified is known as
Mining
In Insurance terminology, equipment such as tractors, bulldozers, road graders, front-end loaders, and forklifts designed primarily for off-road use are considered to be
Mobile equipment
Kid Smart manufacturing makes a line of children's toys. The possibility that a child may be injured because of a defect in a Kid Smart toy is what type of liability loss exposure for this toy manufacturer?
Product
Because attorneys, physicians, architects and engineers are considered to be experts in their fields and are expected to perform accordingly, what liability exposure do they face if a client is injured when such an expert fails to exercise the appropriate standard of care?
Professional liabilty
The term "net income losses" is usually associated with
Property losses
In property insurance. the term "property in transit" refers to which one of the following?
Property while being transported by trucks, cars, buses, trains, airplanes, and ships
COPE is an acronym for the basis used to examine commercial property loss exposures. The letter P in COPE represents?
Protection
Insurance deals primarily with
Pure risks
The statement, "There is a five percent chance that John will be injured in an automobile accident while driving to work tomorrow," is an example of
Quantifying risk
The use of data gleaned from sensors to react immediately to hazardous situations is know as
Real time risk management
Which one of the following statements is true regarding risk management efforts on the part of individuals, organizations, and society in general?
Risk management makes those who own or run an organization more willing to undertake risky activities.
Which two risk control measures are directly aimed at reducing the severity of net income losses?
Separation and duplication
Which one of the following statements is correct regarding the risk control technique of separation?
Separation is rarely undertaken for its own sake, but usually a product of another management decision
The relationship among the mean, median and mode for any data set are illustrated by the distributions
Shape
Personnel loss exposures can be comprised of all the following categories of key personnel, EXCEPT:
Shareholders
Which one of the following is a main theoretical concept that explains how traditional risk management works?
Silo approach.
When developing loss severity distributions, risk professionals should organize loss data by
Size of loss
Which one of the following risk management program goals enhances an organization's reputation?
Social responsibility
Regarding diversifiable and nondiversifiable risk, which one of the following statements is accurate?
Systemic risks are generally nondiversifiable.
Which one of the following is particularly useful in vacant or temporarily unoccupied buildings?
Temperature sensors
Risk involves The possibility of a negative outcome. Possibility means
That an outcome may or may not occur.
In the context of identifying loss exposures, hazards analysis is a method
That identifies conditions that increase the frequency or severity of loss.
Eric's tire business is operated out of a single warehouse. He has tires, equipment, furniture, and supplies at this location. Eric employs 15 individuals at a total cost of $50,000 monthly. The building is valued at $100,000, and the tires and equipment are worth $50,000. The supplies and furniture in the warehouse are worth approximately $5,000. If Eric's property is destroyed and not restored for an entire month, what is the maximum possible loss of the property?
$155,000
A building contractor uses lower grade materials than called for in the specifications for an office building. A year after the building was completed, a balcony collapses, injuring several employees and customers and causing damage to the building and contents. For the building construction company this is an example of
A completed operations liability exposure
Lucas is a building owner. He has contractually agreed to indemnify one of his tenants in the event that the tenant is found legally liable for a bodily injury claim that occurs on the leased premises. Which one of the following is the term for this contractual agreement?
A hold-harmless agreement
Perils are an important aspect of property insurance. Which one of the following statements is correct with respect to perils?
A peril is the actual means by which property is damaged or destroyed such as fire, lighting, windstorm, hail or theft.
Classifying risk appropriately can help in managing risk. Which one of the following statements is correct with respect to the classification of risk.
A pure risk is a chance of loss or no loss, but no chance of gain.
One risk financing goal is to comply with legal requirements. An example of one such legal requirement is
A state insurance law that requires the purchase of liability insurance for vehicles.
Probability analysis is best suited for organizations that have
A substantial volume of data on past losses
Probability analysis is particularly effective for projecting losses in organizations that have
A substantial volume of data on past losses and fairly stable operations.
One way of jointly considering frequency and severity is to combine both frequency and severity distributions into
A total claims distribution
The loss of or damages to property can have adverse financial consequences including reduces property value. Which one of the following statements is correct with respect to a reduction in value?
A valuable painting that is repaired after being damaged is likely to have declined in value.
A secured lender (secured creditor)
Acquires conditional rights to property, such as the right to repossess it if loan payments are not made.
Which one of the following statements regarding monitoring the results of a risk management program is true?
Activities standards are necessary to obtain a complete picture of the success or failure of a risk management program.
The possibility that a retailer might be sued because it used a customer's photo in a sales brochure without the customer's permission is what kind of liability exposure for the retailer.
Advertising
The cost of a risk management technique can be determined through a cost-benefit analysis that considers the technique's effect on the frequency, severity , and timing of expected losses relative to an estimate of the
After-tax costs involved in applying for various risk management techniques.
An organization that maintains a production site and an active backup site that functions as the primary site as needed is using which of the following continuity plan strategies?
Alternative site mode
A risk management plan that considers all of the risks that an organization faces, including operational, financial, and strategic risks, is called
An enterprise risk management plan.
Which one of the following would indicate that an organization is using the risk control technique of duplication to reduce loss severity?
An organization makes arrangements with more than one supplier of a key raw material
Two steps of the risk management process, when combined, constitute the process of assessing loss exposures. For this reason, they are probably the two most important steps in the process. These two steps are identifying loss exposure and
Analyzing loss exposure
Which one of the following statements is correct with respect to applying risk control techniques to the various types of loss exposures?
Any measure that controls property, liability, or personnel loss exposures also indirectly controls associated net income loss exposures.
Which one of the following best defines a hazard?
Anything that increases the frequency or the severity of a loss.
A completed operations liability exposure differs from a products liability loss exposure in that the completed operations liability loss exposure
Arises out of the entity's completed work, including defective parts or materials furnished with the work.
Insurers and risk managers can use the large volumes of data collected and organized through telematics to help improve results for which one of the following types of insurance?
Automobile
In insurance terminology, trucks, trailers, buses, fire engines, and ambulances designed for road use are examples of which one of the following categories of motor vehicles?
Autos
Data credibility refers to the level of confidence that
Available data can accurately indicate future losses
Which one of the following is correct with respect to the potential financial consequences of a property loss
Bailees need to consider not only their owned property loss exposures, but also the exposures of property held for others.
Which one of the following describes the distribution shape in which the mean, median and mode all have the same values?
Bell-shaped
The normal distribution is a probability distribution that, when graphed, generates a particular type of curve. Which one of the following best describes that curve?
Bells-shaped
Which one of the following is a virtual ledger of data that has been verified, timestamped, encrypted, and protected against tampering?
Blockchain
Many businesses have refrigeration equipment, production equipment, steam boilers, and air conditioning systems. These are all examples of
Boilers and machinery
Which one of the following is a risk control technique that could be considered both a loss reduction and a loss prevention measure?
Burglar alarm
The possibility that a plumbing contractor might start a fire at a customer's house while soldering a pipe is what type of liability loss exposure for the plumber?
Business operations
A commercial building may contain furniture, machinery and equipment, raw materials, and finished products. Which one of the following is the term generally used in property insurance policies to refer to all types of property?
Business personal property
Which one of the following statements is correct with respect to property loss exposures?
Commercial property underwriters commonly assess fire loss exposures based on each building's construction, occupancy, protection, and external exposure.
Classifying the various types of risk can help in assessing, controlling, and financing risk as part of the risk management process. Which one of the following statements is true regarding the typical classifications of risk?
Classifications of risk can help with controlling and financing risk.
Which one of the following products has led to significant improvements in supply chain management by allowing for the immediate identification of discrepancies and interruptions as well as timely actions that can prevent or reduce losses?
Closed-loop system
Which one of the following steps required to monitor and revise the risk management program refers to a proper standard that includes specifications for how results or performance will be measured, such as target activity levels or results?
Compare actual results with standards
A risk management program must be monitored and periodically revised, and that revision involves four steps. Which one of the following is one of those four steps?
Compare actual results with the established performance standards.
County Janitorial Service has contracted with local bars and taverns to clean their restrooms on a daily basis. County's greatest liability exposure is probably
Completed operations
A licensed electrician completes the job of rewiring a house and returns to his shop. With regard to this job, an electrician has a
Completed operations loss exposure
The development and implementation of a business continuity plan entails seven steps. Which one of the following steps involves assessing what events may occur, when they will occur, and how they could affect achievement of key objectives?
Conducting a business impact analysis
In order to avoid underestimating or overestimating loss projections, historical loss data must be expressed in
Constant dollars
Property insurance policies use the term "personal property" to refer to the
Contents of a building
Which of the following risk management program goals is an essential goal for all public entities?
Continuity of operations
Organizations find it difficult to establish a benchmark against which the performance of their risk management program can be assessed because it is difficult to assign a specific value to the
Cost of residual uncertainty
One goal of risk financing is to handle risk in a cost effective manner.To do this, an organization seeks to minimize its total expenditures on loss control, retained losses, loss transfer costs, and administrative expenses. A composite measure encompassing all expenditures on risk is called an organization's
Cost of risk
When a business suffers loss of income following a liability suit that causes customers to lose confidence in the business' products, what type of loss has the business suffered?
Damage to reputation
Which one of the following potential financial consequences of liability loss exposures is often difficult to quantify?
Damage to reputation
Understanding the cumulative probability distribution will enable an analyst to evaluate the effect of various
Deductibles and policy limits on insured loss exposure
Products liability loss exposure arise out of injuries or damage that result from an organization's
Defective product
In theory, liability losses are limited only by the
Defendant's total wealth
A neighbor has sued Andy for property damage that is potentially covered under Andy's homeowners liability coverage. Even if this lawsuit is found to be groundless, Andy's insurers will still probably be obligated to pay
Defense costs
The relationship between the expected value and the standard deviation of a normal distribution can have useful practical application. Which one of the following best describes such a practical application?
Determining a maintenance schedule for equipment that could become dangerous if it were to fail
Understanding the business is the first step in the development of a business continuity plan. Understanding the business involves
Determining key objectives.
The cause of loss that occurs more frequently than death, causing personnel losses, is
Disability
Maria is a risk management professional trying to analyze workers compensation loss frequency by cause of loss. Which one of the following forms of probability distribution would be most appropriate for her to use?
Discrete
The extent to which a distribution is spread out rather than concentrated around the expected value is its
Dispersion
Risk can be classified as divesifiable or nondiversifiable. Which one of the following statements is true with respect to this type of risk classification?
Diversifiable risks tend to be correlated so they can be managed through diversification or spread of risk.
Which one of the following risk control techniques is more commonly applied to managing business risks, rather than hazard risks?
Diversification
Which one of the following statements is correct regarding duplication?
Duplication reduces loss severity without increasing loss frequency
Which one of the following statements is accurate regarding pure and speculative risks?
Every business venture involves speculative risks.
Determining the probability that a certain event will occur can be an important part of exposure analysis in the risk management process. Which one of the following is the term used for probability that is developed based on actual experience?
Empirical probability
Which one of the following best describes the function of the service layer of a smart operation?
Employing applications that use data processing, cloud computing, and storage and analysis of large amounts of data
Which one of the following types of risk assessment involves a global assessment of risks that could affect the organization's overall business goals?
Enterprise assesment
Which one of the following loss reduction measures taken by a property owner would be considered a post-loss measure?
Establishing a plan to temporarily relocate to another location
Ships and their cargoes represent a special category of property insurance. Which one of the following statements is correct with respect to this category?
Even more than other property, ocean cargoes fluctuate in value according to their location.
Which one of the following is the term used for the weighted average of all the possible outcomes in a theoretical probability distribution?
Expected value
When a newspaper's printing press is damaged, the company may spend extra money to have the newspaper in an example of which one of the following?
Extra expense
Which one of the following statements is correct with respect to evaluating the efficiency of alternative risk control measures?
Given a loss exposure and the effective alternative risk control measures, the risk manager can determine which is most efficient by using cash flow analysis
Which one of the following documents would best help to identify bottlenecks in an organization's operations that might present critical loss exposure?
Flowcharts
Probabilities are stated as decimal figure, a percentage, or a
Fraction
Inspections often identify loss exposures that a review of the written description of the organization's operations would not reveal. Which one of the following groups of individuals within the organization are best able to identify non-obvious loss exposures to a person conducting an inspection?
Front-line personnel
Which one of the following is the first step in the risk management process?
Identify loss exposures.
After identifying and analyzing loss exposures and evaluating and selecting the appropriate risk management process is to
Implement the selected technique.
Which one of the following statements is true regarding typical shapes of symmetrical and skewed distributions?
Ina symmetrical distribution, the mean and median have the same value
Net income losses can be caused by which one of the following?
Increases in expenses
Three main theoretical concepts explain why ERM works. Which one of the following correctly lists those three concepts?
Interdependency, correlation, and portfolio theory.
Which one of the following is the network through which sensors and other smart products capture and transmit data?
Internet of things
Risk can be classified as pure or speculative. Which one of the following is the best example of a speculative risk?
Investing in shares of stock.
For property insurance purposes, wall-to-wall carpeting is typically considered to be part of the building because it
Is permanently attached to the building
The concept of correlation, in the context of why enterprise risk management works
Is the proposition that correlation increases risk while uncorrelated risks can reduce risk.
An organization must meet the standard of care hat it owes to others in order to ensure that
Legal obligations are satisfied
To understand risk, one needs to know the probability of an outcome or event occurring. Which one of the following statements is correct with respect to probability?
It can be used to decide which activities to undertake.
In addition to document analysis, risk professionals may also conduct compliance reviews to identify loss exposures. Which one of the following isa benefit of conducting compliance reviews if the organization has adequate in-house legal and accounting resources?
It can conduct most of the compliance reviews itself.
Which one of the following is an advantage of using radio frequency identification (RFID) for supply chain management?
It identifies assets and compiles their characteristics without human intervention.
Risk professionals use measures of dispersion of the distributions of potential outcomes to gain a better understanding of loss exposures being analyzed. Which one of the following is true regarding the standard deviation of a distribution?
It indicates how widely dispersed the value in a distribution are.
Which one of the following best describes a probability distribution?
It presents probability estimates for a particular set of circumstances and the probability of each possible outcome
Kendall Incorporated is a manufacturer located in Maryland. Which one of the following would indicate that Kendall Incorporated is using the risk control technique of diversification to reduce loss severity?
Kendall Incorporated produces a wide variety of products to serve a range of markets
Which one of the following uses infrared light to detect nearby objects?
Lidar
Which one of the following focuses on the minimum building design, construction, operation, and maintenance requirements necessary to assure occupants of a safe exit from the burning portion of the building?
Life safety
The second step in the risk management process is analyzing loss exposure. Which one of the following is true regarding this step?
Loss exposures are analyzed based on loss frequency, loss severity, total dollar losses, and timing in this step.
Which one of the following dimensions refers to the number of losses, such as fires, auto accidents, or liability claims, with a specific time period.
Loss frequency
In loss analysis, the Prouty Approach primarily involves
Loss frequency and severity
Which one of the following strategies for addressing a disruption of operations entails the implementation of risk controls and plans to reduce, minimize or divert any loss?
Loss mitigation
Which one of the following statements is correct with respect to the timing dimension in the analysis of loss exposure?
Money held in reserve to pay for a loss and its payment decreases uncertainty about the value of a loss.
Which one of the following is correct with respect to compliance views?
Monitoring and maintaining compliance through compliance reviews can prevent significant losses that the organization would otherwise incur.
Angelina borrows money from the bank to purchase a house. The house serves as security for the loan. In this transaction, the bank is the
Mortgagee
Angelina borrows money from the bank to purchase a house. The house serves as security for the loan. In this transaction, Angelina is the
Mortgagor
Property insurance policies not only protect the property owner but also generally protect a secured lender's interest in the financed property by
Naming the lender on the owner's policy
The difference between an organization's total revenues and its total expenses is
Net Income
When property is lost or damaged, the value of the property is decreased. In addition to direct damage to the property, there could be indirect losses to the business. This latter type of loss is known as
Net income loss
Insurance and risk management professionals use which one of the following methods to evaluate the variability around the mean and apply it to business decisions?
Normal probability distribution
Which one of the following describes how probabilities are expressed?
Numerically, as a fraction, a percentage, or a decimal.
Liability entries on an organization's balance sheet are particularly useful to the risk professional for identifying which one of the following loss exposures?
Obligations such as mortgage payments
Which one of the following statements is correct with respect to continuous probability distributions?
One way of presenting a continuous probability distribution is to divide the distribution is to divide the distribution into a countable number of bins
Risk management programs should
Operate economically and efficiently.
Which one of the following types of data organization is the foundation for developing loss severity distribution or loss trends over time?
Organizing losses by size
In a normal distribution, fewer than 5% of outcomes are
Outside two standard deviations above or below the mean
An example of an administrative expense that can minimize the cost of risk is
Outsourcing the claim function
The death of a shareholder in a close corporation is often a significant event for the corporation for which one of the following reasons?
Ownership in a close corporation is typically concentrated in just the few major shareholders, most of whom are also managers.
Which one of the following is measurable and quantifies risk?
Probability
A company turnover rate well above company and industry average be a sign of
Personnel problems that need to be addressed
Other than for money, for what primary reason, or types of reasons would an internationally based American organization's employees be kidnapped or held for ransom?
Political reasons
What kind of liability exposure does a manufacturer face if it emits contaminants that cause environmental impairment?
Pollution
In the context of risk, the chance of being injured while driving to and from work, loading a truck at work, moving furniture at home, or falling in an icy parking lot at the mall are all examples of
Possibilities
Business continuity is designed to meet both the primary risk management program post-loss goal of continuity of operation and the
Post-loss goal of survival
Anyone who owns or occupies property has a
Premises liability loss exposure
Which one of the following statements regarding probability is correct?
Probabilities associated with events such as coin tosses can be developed from theoretical considerations and are unchanging.
Which one of the following Statements is true?
Probabilities deduced solely from historical data may change as new data are recovered or the environment changes.
The two benefits of risk management affecting individuals, organizations, and society are: it preserves financial resources by reducing expected losses and it
Reduces the residual uncertainty associated with risk.
All of the following are considered risk control techniques, Except:
Reinsurance
The mean is calculated by weighting each observed outcome by the
Relative frequency with which it occurs
Recruiting, interviewing, and training a new employee who replaces a worker who has just resigned are examples of which one of the following types of financial consequences following from personnel losses?
Replacement costs.
Examples of risk control reduction techniques that primarily apply to occupancy are
Safety training and emergency evacuation procedures
Restricting the number of key employees who can travel on the same aircraft is an example of which one of the following risk control techniques?
Separation
Which one of the following best identifies types of organizations that should be concerned with personnel loss exposure from a manager leaving for another organization?
Sole proprietorship, close corporations, and corporations with separation of ownership and control
Under the Prouty Approach of analyzing loss exposures, the four broad categories of loss frequency and the three loss severity categories are
Subjective
Risk can be classified as subjective or objective. Which one of the following statements is correct wit respect to these risk classifications?
Subjective risk can exist even where objective risk does not.
Which one of the following is essential to an effective risk management program?
Support of the organization's senior management.
Which one of the following statements is true regarding enterprise risk management (ERM)?
The ERM framework encompasses all stakeholders in the organization.
Josephine Redmond who is the sole proprietor of Dream Quilts, Inc., operates out of three branch offices with 17 employees. What happens to Josephine's business if she dies or retires?
The business ceases to exist.
Many laws and regulations require organizations to implement specific risk control measures. Which one of the following statements is true in this regard?
The cost of adhering to these legal requirements becomes part of the cost of risk.
Which one of the following cost is part of the overall financial consequences of risk?
The cost of the value lost due to events that caused a loss.
Which one of the following describes the two ways in which loss data must be consistent to accurately estimate future loss exposure?
The dat must be collected on a consistent basis foe all recorded losses, and the data must be expressed in constant dollars.
To accurately analyze loss exposures using data on past losses, the data should meet certain criteria. Which of the following lists those criteria?
The data should be relevant, complete , consistent and organized.
When considering an empirical distribution, the measure of central tendency is called the mean. Which one of the following is correct with respect to the mean?
The mean is the sum of the values in a data set divided by the number of values
Which one of the following statements is true regarding central tendency when comparing the characteristics of probability distributions?
The measures of central tendency represents the best guest as to what the outcome will be.
One of the ways in which probabilities can be developed is theoretically. Which one of the following is an example of an event for which probability can be determined theoretically?
The number of times heads can be expected to turn up over multiple coin tosses.
While involuntary employee separations may expose an organization to additional liability loss exposure, such as wrongful termination accusations, they generally are not considered a personnel loss exposure because
The organization has determined that it is better off without that employee.
Three main theoretical concepts explain how enterprise risk management (ERM) works. One theoretical concept considers not only the combination of individual risks but also their interactions. This theoretical concept is
The portfolio theory.
When a property is used to secure a loan, which one of the following is exposed to loss?
The property owner and the secured lender.
Which one of the following statements is true regarding the use of checklists and questionnaires to identify loss exposures?
The questionnaires developed by insurers, called insurance surveys, relate mainly to loss exposures for which commercial insurance is generally available
Which one of the following statements is true regarding risk management techniques?
The risk management techniques selected by for-profit organizations should be both effective in meeting the organization's goals and economical.
The focus of risk quadrants is different from the focus of risk classifications. While the classifications of risk focus on some aspect of risk itself, the four quadrants of risk focus on
The source of risk and who has traditionally managed them.
Which one of the following is usually the single largest impediment to successful implementation of enterprise risk management (ERM)?
The traditional organizational culture.
For insurance purposes, money and securities are separate from other types of contents because
They are highly susceptible to loss by theft
Which one of the following best describes effective and efficient risk control measures?
They are the least expensive measures of all possible effective that achieve an organizations risk management goals.
Which one of the following best explains how most smart products potentially improve risk management?
They generate big data to which advanced analytics can be applied.
Which one of the following is true regarding risk control techniques?
They minimize the frequency or severity of losses or make losses more predictable.
Which one of the following statements is correct with respect to empirical probability distributions?
They provide a mutually exclusive, collectively exhaustive list of outcomes.
Investment income and interest earnings should be considered when analyzing which one of the following dimensions of loss exposure?
Timing
Which one of the following statements is true regarding the use of inspections to identify loss exposures?
To be effective, inspections should be accompanied by discussions with front-line personnel who can identify non-obvious loss exposures.
In addition to implementing effective and efficient measures, complying with legal requirements, and promoting safety, which one of the following is a goal of risk control efforts?
To minimize or eliminate significant business interruptions, whatever their cause
Which one of the following is the goal of a loss prevention measure?
To reduce the frequency of particular loss without avoiding it
Aligning risks with the organization's risk appetite defines
Tolerable uncertainty
All for-profit organizations are exposed to net income losses. Net income is defined as
Total revenue minus total expenses.
The single largest impediment to successful implementation of an enterprise risk management (ERM) program is
Traditional organizational culture with entrenched risk silos.
One approach to categorizing risks involves dividing risks into risk quadrants. The risks categorized as hazards are
Traditionally managed by risk management professionals.
Which one of the following is a risk financing technique?
Transfer
Which one of the following statements is correct with respect to risk control techniques for net income loss exposure?
Two risk control techniques that are directly aimed at reducing the severity of net income losses are separation and duplication.
One of the elements of risk is uncertainty. Which one of the following best describes the uncertainty that risk involves?
Uncertainty as to the type and timing of an outcome.
Which one of the following statements is correct with respect to the completeness of past loss data when estimating future loss exposure?
What constitutes complete loss data depends on the nature of the loss exposure being considered.
Extra expenses are a common financial consequence of property losses. Which one of the following is an example of an extra expense?
When a family's house is damaged, the family must pay rent to live in a hotel temporarily
Other than some type of merger, layoff, or organizational change, which one of the following is an example of a situation where an entire group of employees might leave an organization?
When employees follow a manager to a new organization.
Which one of the following statements is true regarding characteristics of normal distribution?
When graphed a normal distribution generates a bell-shaped curve
A risk professional may use dispersion to compare the characteristics of probability distributions. Which one of the following statements is true in this regard
When two or more distributions are plotted on a graph, the one with the most sharply peaked curve has the smallest standard deviation
Risk professionals may be able to use measures of dispersion around estimated losses to determine
Whether to offer insurance coverage to a potential insured.
Probability analysis would be most reliable for projecting losses in an organization
With a substantial volume of data on past losses.
Which one of the following describes the law of large numbers?
it states that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes also increases.
