All of the following are direct losses EXCEPT:

a. the roof is blown off your house

b. you are sued for $50,000 following an auto accident with another driver

c. you need a temporary apartment after the one you are living in is destroyed in a fire

d. a friend sustains a broken arm due to slipping on a piece of ice from your refrigerator requiring medical treatment

2.All the following are diversifiable risks EXCEPT

a. investment risk

b. damage from hurricanes

c. theft of your car

d. a fire at your home

3.The greater the beta, the ________ of the security involved.

Select one:

a. greater the avoidable risk

b. less the unavoidable risk

c. greater the unavoidable risk

d. less the avoidable risk

4.An insured direct cost of an accident in the workplace could be..........

Select one:

a. The absence of employees due to workplace accident

b. First and provision and safety trainings

c. Product or process liability claims

d. increases in insurance premiums resulting from the workplace accident

5.The feasibility of converting an asset quickly and without significantly affecting its price is called

Select one:

a. Flexibility

b. Marketability

c. Liquidity

d. Convertibility

6.In property insurance terminology, direct losses are the costs of

Select one:

a. repairing property destroyed

b. replacing third party property damaged

c. replacing property destroyed

d. repairing property damaged.

7.An ice cream shop experienced issues with its electrical system after a thunderstorm. Besides stopping other operations, the freezers stop working. This damaged their ice creams inventory, thereby preventing the business from making sales and having to replace its products. This cost the business thousands of dollars in sales loss. This scenario is an example of

Select one:

a. direct loss

b. consequential loss

c. time element loss

d. indirect loss

8.All the following have legal interest in a property except

Select one:

a. Sole ownership.

b. Proprietary owner

c. Employer

d. Representative owner

9.Property insurance protects the property holder against

Select one:

a. Non-direct losses and indirect losses.

b. direct loss only

c. direct losses and indirect losses.

d. Non-direct losses only

10. What is the term used for risk associated with the entire stock market?

Select one:

a. Diversifiable risk

b. Investor risk

c. Systematic risk

d. Residual risk

11.Which of the following is not a category of risk arises out of physical asset exposure?

Select one:

a. Loss of value through economic obsolescence

b. Liability losses resulting from negligent use of property

c. Profit loss resulting from death or disability of the wage earner

d. Loss of property due to fire, wind, water or other hazards

12.Which of the following assets is a financial asset?

Select one:

a. Real property

b. Stock options

c. Equipments

d. Precious metals

13.In property insurance terminology, indirect losses are the costs of

Select one:

a. replacing property destroyed

b. repairing property destroyed

c. additional living arrangement following a loss

d. personal liability coverages.

14.Which of the following assets is a physical asset?

Select one:

a. Futures contract

b. Commercial papers

c. Preferred stocks

d. Real estate

15.Which of the following is not a source of unsystematic risk?

Select one:

a. Insolvency risk

b. Business risk

c. Financial risk

d. Purchasing power risk

16.Which of the following securities have potentially the highest risk level and the highest potential return?

Select one:

a. Derivatives securities

b. Common stocks

c. Commercial paper

d. Bonds

17.Which of the following sequences lists financial assets from least risky to most risky?

Select one:

a. Derivatives, bonds, stocks

b. Bonds, derivatives, stocks

c. Stocks, bonds, derivatives

d. Bonds, stocks, derivatives

18.Which of the following statements is TRUE?

Select one:

a. Generally speaking, bonds are riskier than common stocks

b. Low inflation is expected to have a negative effect on bond prices

c. Bonds are usually less liquid that stocks

d. A bondholder repays principal when the bond matures

19.Which one of the following is not an example of a time element loss?

Select one:

a. Stock market prices fluctuation

b. Temporary shop closure

c. Additional rental expenses

d. Service interruptions

20.Which one of the following losses is an indirect loss?

Select one:

a. Damage to a car when a tree falls on it

b. Loss due frequent shoplifting activities by internal employee

c. Loss caused by an arsonist who burns down a building intentionally to collect insurance proceeds

d. Loss due to inability to produce and sell goods caused by machine malfunctions