Insurance and Risk Management Online MCQ Set 4

QN01. The premium implies ______________

  1. Consideration by Service
  2. Consideration by cash
  3. Consideration by Kind
  4. Speculative Cash
Answer

(B)Consideration by cash

QN02. A risk manager should report to ______________

  1. Managing Director
  2. Company Secretary
  3. Supervisor
  4. General Manager
Answer

(C)Supervisor

QN03. The Risk Evaluation breaks into two parts.They are ______________

  1. The cause of loss and its affects
  2. The probability of loss occurring and its severity
  3. The loss due to any reasons
  4. The risk and return
Answer

(B)The probability of loss occurring and its severity

QN04. The condition for insurable interest is ______________.

  1. Loss should be sufficiently in monetary terms
  2. Loss potential should be sufficiently large
  3. Interest on the subject matter of the insurance
  4. Loss cannot be managed
Answer

(C)Interest on the subject matter of the insurance

QN05. Having money available when it is needed is defined as the art of ______________.

  1. Financial management
  2. Risk management
  3. Contingency fund
  4. Surplus
Answer

(A)Financial management

QN06. Risk management is concerned with ______________.

  1. Planning
  2. Arranging and controlling of activities
  3. Managing of funds
  4. Planning, arranging and controlling of activities
Answer

(D)Planning, arranging and controlling of activities

QN07. In alike the risk of creditors and shareholders by High Capital Gearing ratio companies is ______________.

  1. Increased
  2. Decreased
  3. Government
  4. Management and Employees
Answer

(A)Increased

QN08. That which are not independent parts of the whole risk management process are ______________.

  1. Risk Control and Risk Financing
  2. Risk Retention and Risk Analysis
  3. Risk Retention and Risk Financing
  4. Risk Analysis and Risk Control
Answer

(A)Risk Control and Risk Financing

QN09. That which helps to determine the accuracy and relevance of risk at each stage to which an organization is exposed is known as ______________.

  1. Principle of Identification
  2. Principle of Risk Analysis
  3. Principle of Assessment Risk
  4. Principle of Corrective Decision
Answer

(B)Principle of Risk Analysis

QN10. The cost of increased precautions and limits on risky activity to reduce the frequency and severity of accidents and losses is covered by ______________.

  1. Cost of Loss Financing
  2. Cost of Expected Losses
  3. Cost of Control of Loss
  4. Cost of Internal Risk Reduction
Answer

(C)Cost of Control of Loss

QN11. If impurity of data is the problem that RMIS is showing then provide ______________.

  1. clear and comprehensive specifications
  2. solid vendor account team
  3. reference checks, including on-site
  4. assessment in proper manner
Answer

(C)reference checks, including on-site

QN12. The routine medical check up during a year is an example of ______________.

  1. Loss prevention
  2. Loss reduction
  3. Risk avoidance
  4. Retention
Answer

(A)Loss prevention

QN13. Which of the statements is correct? a. The simplest way to deal with a risk to avoid it. b. This technique is always possible and practical.

  1. Statement A
  2. Statement B
  3. Both the statements
  4. Neither of the statements
Answer

(D)Neither of the statements

QN14. Insurance is based on the principle of ______________.

  1. co-operation
  2. Democracy
  3. Equality
  4. welfare
Answer

(A)co-operation

QN15. The person who agrees to compensate the loss arising from the risk is called the ______________.

  1. Insurer
  2. Assurer
  3. Underwriter
  4. All the above
Answer

(D)All the above

QN16. Notice of abandonment is necessary in the case of ______________.

  1. Actual loss
  2. Constructive total loss
  3. Partial total loss
  4. Minimum loss
Answer

(B)Constructive total loss

QN17. ______________ policy is which covers the risk during all situations.

  1. Floating
  2. Wagering
  3. Valued
  4. Mixed
Answer

(D)Mixed

QN18. ________________ provides evidence of insurance to the policies and Registration Authorities under Motor Vehicle Act.

  1. Cover note
  2. Endorsements
  3. Certificate of insurance
  4. Policy form
Answer

(C)Certificate of insurance

QN19. Which of the following steps in the risk management process helps in determining sum insured under policies?

  1. Risk identification
  2. Risk Retention
  3. Risk Evaluation
  4. Risk Transfer
Answer

(C)Risk Evaluation

QN20. Insurance business is based on ______________.

  1. Parkinsons law
  2. Newtons law
  3. The theory of probability and law of large numbers
  4. Boyles law
Answer

(C)The theory of probability and law of large numbers

QN21. A person who is risk averse ______________

  1. accepts the risk no matter what
  2. do not accept the risk as a loss hurts them more than gain benefits them
  3. tries to control the loss
  4. avoids insurance
Answer

(B)do not accept the risk as a loss hurts them more than gain benefits them

QN22. The concept of insurance is ______________.

  1. to share the losses by many
  2. to make money out of death.
  3. to earn interest
  4. to earn a status
Answer

(A)to share the losses by many

QN23. Insurance penetration in India in 2001 was

  1. 1.93
  2. 2.32
  3. 2.71
  4. 2.25
Answer

(C)2.71

QN24. Risk means ______________

  1. economy
  2. possibility of loss
  3. .reduction of anxiety
  4. . meeting externally imposed obligations
Answer

(B)possibility of loss

QN25. A person who dislikes risk is known as ______________

  1. Risk lover
  2. Risk Averse
  3. Risk Neutral
  4. Insurer
Answer

(B)Risk Averse

QN26. The two Aspects of risk Managers are ______________

  1. Record keeping and reporting of the activities
  2. Maintaining accounts and reporting
  3. Carry out analysis and control
  4. Marketing
Answer

(A)Record keeping and reporting of the activities

QN27. The type of reinsurance that forms individual large losses of risk is called as ______________.

  1. Proportional quota share
  2. Excess of loss per event basis
  3. Stop loss
  4. Facultative
Answer

(A)Proportional quota share

QN28. Organisations are mainly concerned with managing

  1. Pure Risk
  2. Speculative Risk
  3. Personal Risk
  4. None of the above
Answer

(A)Pure Risk

QN29. That which take advantage to the law of large numbers is ______________

  1. Risk retention
  2. Combination
  3. Hedging
  4. Inflation
Answer

(B)Combination

QN30. Fire insurance can be taken in respect of ______________.

  1. movable properties only
  2. immovable properties
  3. movable and immovable
  4. persons only
Answer

(C)movable and immovable

QN31. 'Accrued interest' is:

  1. The interest on a bond, paid when it matures
  2. The interest accumulated since the last coupon date, paid by the purchaser to the seller
  3. The interest on a bond, paid every year
  4. The interest paid by the issuer of the bond
  5. The interest accumulated since the last coupon date, paid by the seller of the bond to the purchaser
Answer

(B)The interest accumulated since the last coupon date, paid by the purchaser to the seller

QN32. 'Reinsurance' refers to the practice by insurance companies of:

  1. Issuing new policies
  2. Terminating existing policies
  3. Renewing existing policies
  4. Buying insurance from another firm
  5. Insuring the same risk twice
Answer

(D)Buying insurance from another firm

QN33. A 'pay as you go' pension system is unsuitable for a private firm because:

  1. There is a disincentive effect for current workers
  2. The benefits are insufficient
  3. Employees are not willing to pay
  4. The dependency ratio is too high
  5. The firm may cease trading
Answer

(E)The firm may cease trading

QN34. A 'Pay-As-You-Go' pension is one in which:

  1. Pensioners are obliged to buy an annuity
  2. Workers build up a fund of savings during their working life
  3. Pension benefits are linked to a price index
  4. Pension benefits are paid by the employer
  5. Pension benefits are paid from the contributions of those in work
Answer

(E)Pension benefits are paid from the contributions of those in work

QN35. A 'positive term premium' means:

  1. Long term loans are riskier than short term loans
  2. Short-term rates are likely to fall
  3. Long-term interest rates are higher than short-term rates
  4. Nominal interest rates are higher than real rates
  5. Borrowers prefer to borrow for long periods
Answer

(C)Long-term interest rates are higher than short-term rates

QN36. A bank with cash of 5, deposits at the central bank of 3, investments of 20, advances of 22 and customer deposits of 50 has a reserve ratio of:

  1. 0.5
  2. 0.23
  3. 0.36
  4. 0.16
  5. 0.1
Answer

(D)0.16

QN37. A bank's risk:asset ratio compares its capital with its:

  1. Risk-adjusted assets
  2. Reserves
  3. Investments
  4. Loans
  5. Risk-adjusted liabilities
Answer

(A)Risk-adjusted assets

QN38. A belief that expectations were exogenous could lead one to the view that judgements about the future were likely to be based on:

  1. The best available information
  2. Past experience
  3. The best available model
  4. The forecasts of the person with the best forecasting record
  5. Both the 1st and 3rd answer
  6. Both the 1st and 2nd answer
Answer

(B)Past experience

QN39. A bond issued in July 1997 will mature in July 2013 for £100. In July 2003, its original maturity and residual maturity would be (respectively):

  1. 16 and 10
  2. 10 and 6
  3. 6 and 10
  4. 16 and 6
  5. 6 and 16
Answer

(A)16 and 10

QN40. A central bank which sets the short-term rate of interest must:

  1. Meet the resulting demand for reserves
  2. Seek government approval
  3. Change the reserve ratios
  4. Sell government bonds
  5. Buy treasury bills
Answer

(A)Meet the resulting demand for reserves

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