MCQ on Insurance and Risk Management with Answers Practice Test for BBA, MBA, Mcom, Bcom, and other Banking & Finance exams
MCQ on Insurance and Risk Management with Answers
1. ___ as the number of exposures increases.
Answer: Objective risk
2. ___ increases the frequency of loss.
b) Subjective risk
d) Objective risk
3. An earthquake happens due to a hazard present. (True/False).
4. ___ hazard increases the probability of loss due to dishonesty or character defects of an insured person.
5. ___ has an inherent tendency to amplify the degree of risk.
6. ___ can be assessed.
Answer: Degree of risk
7. In ___ the outcomes can be identified with known probabilities.
Answer: Level 1 (Objective probability)
8. Uncertainty does not exist at level 1 (objective probability). (True/False).
9. The different degrees of uncertainty can be represented on a straight line called ___.
10. ___ risks happen within a stable environment and are constant over an observed period of time.
11. Which among the following is not a pure risk?
a) Personal risk
b) Property risk
c) Loss of income risk
d) Strategic risk
12. The contract of insurance is usually applicable only to pure risks. (True/False).
13. According to the holistic view, risk management must only cover insurable risks. (True / False).
14. In ___ method of identifying risk it is difficult to identify the industry-specific risk, as it is general in nature.
15. Evaluating the risk needs to be measured in two dimensions that is ___ and ___.
Answer: Loss frequency, Loss severity
16. Which of the following method reduces the chance of loss to zero?
a) Risk Transferring
b) Risk avoidance
c) Risk retention
d) Risk reduction
17. In ___ strategy, risks are retained in a proportion so that the overall risk is reduced.
Answer: Risk combination
18. ___ strategy involves two parties to reduce risk.
Answer: Risk transfer
19. ___ refers to the manner in which the risk control measures that have been implemented shall be financed.
a) Risk financing
b) Risk retention
c) Risk transfer
d) Risk sharing
20. ___ finances the loss by retaining the operating revenues and earnings.
Answer: Risk retention
21. ___ is transferred from one entity to another entity in different ways.
Answer: Risk of loss
22. ___ is a process to manage dangerous functions and policies that cause losses to an organization.
Answer: Risk management
23. ___ is the most famous tool of risk management
a) Certainty risk
c) Loss prevention
d) Uncertainty risk
24. ___ is a part of the overall agenda for managing the risk and safety of a construction project.
Answer: Insurance procurement
25. In insurance, the ___ occurs in „excess-of-loss‟ or „stop-loss‟ contracts.
Answer: Pay off