Risk is indicated by variability, whether the variability is considered positive or negative. Luke MB ($ per unit) Sales (units a month) 24.00 1 18.00 2 12.00 3 6.00 4 0 5 Leia MB ($ per uni... Paying for a home mortgage and children's education leads to greater: O wealth. In January 1988, Arco bought a 24.3% stake in the British oil firm Britoil PLC. What does the volatility percentage mean? The risk that your main production plant is shut down due to a tornado. When the application is received. A stock has an expected return of 12 percent, the risk-free rate is 5 percent, and the market risk premium is 7 percent. Why are some risks nondiversifiable? Explain which of these factors would be more volatile over the business cycle. What is Gerschenkron's view about the importance of historical timing in economic development? b) The variability of a firm's expected earnings before interest and taxes. Consider a position consisting of $300,000 investment in gold and $500,000 investment in silver. In particular, what analytical procedures should I look at if I was doing JB HI FI? A process that involves prioritizing risks for further action or analysis by assessing the impact and the probability of occurrence is called. c. A city... Are any business settings more in need of contingency planning than others? B. A firm's business risk is measured by the variability in what over time? Don’t assume that all stakeholders and team members track all the aspects of the project as you do. What are the major causes of information risk and what are the three main ways information risk can be reduced. D-)Relationships at work. B-)Professional Growth. 1) Indemnification for loss 2) Enhancement of credit 3) Source of funds... A) Explain the meaning of risk control. D. Inform all participants of the possible storm. He accepts a gamble that has a zero expected value, c. He accepts a gamble that has a negative expected value, d... Do saving bonds reduce the overall risk of an investment portfolio? a. c) The uncertainty associated with a fir... Answer true or false: According to the static theory of capital structure, value-maximizing financial managers will borrow to the point where the firm's business risk is just equal to its financial... Give three reasons that the treasurer of a company might not hedge the company's exposure to a particular risk. What is Risk Identification and Assessment? d. When the insurance company ha... Khloe applies for a life insurance policy with DangerCo Insurance Company. When the first premium is paid. a. The key portfolio features are given below: Business failure risk can be due to A. Good luck. Explain your answer. In general, would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Reach out to the stakeholders and the responsible person with a reminder. Explain. Predict 3-4 most pressing trends for the success of healthcare organizations in the context of financial sustainability. (a) Identified Risks. It includes communications as well. What is the difference between technology risk and operational risk? Becky Fenton has 25/50/25 automobile insurance coverage. C. reducing hazards. Buy insurance to cover the costs of repairs. Sample Exam Questions. PMP Exam Questions and Answers – Risk Planning Risk is inherent in all projects, and risks posed both threats to and opportunities for the project. A formal process to identify risks. It is a data analysis technique in the Perform Qualitative Risk Analysis process. 2. b. resilience and adaptation. Explain why holding investments in portfolios has such a profound impact on the concept of financial risk. The company has agreed that the required contribution will grow by 3.2 percent per year. What additional expertise, aside from knowledge of property and casualty insu... A) Describe the basic features of mutual insurers. Determine if the following statement is true or false. MULTIPLE CHOICE: Choose the one alternative that best completes the statement or answers the question. You've just invested your savings of $25,000. Preview text Ashley had outpatient surgery to re... What arguments would you make for allowing insurers to set their own rates and be regulated by market or competitive forces? From the policyholder's point of view, what type of option is an insurance policy? c. Bind services providers throug... How can an audit team compensate for risk that results when a significant portion of data is overseas and outside of the audit universe? a. What range of returns on your investment would you feel most comfortable with after 1 year? Therefore, you should not wait until John decides to leave to take action. - Use this exam again and again to practice before you go for the real exam . What is the standard deviation of the rate of return on t. Should researchers use real-world or risk-neutral default probabilities for (a) calculating credit value at risk? c. Risk randomization. Her certainty equivalent is greater than the expected value of the income from the chosen activity, b. C. Book another place nearby to mitigate the risk of the first location unavailable due to the storm. What is the difference between VAR and ES, and why ES is superior to VAR as a measure of market risk? b. larger the higher the risk premium used to compute the firm's value is. Created by. When you’re done, you can scroll down (don’t cheat!) ), © 2015–2020 Project Management Basics AÜ | Terms of Service | Privacy Policy | Refund Policy | Contacts. 2. Try Risk Management Questions with MCQ on business risk, financial risk, operational risk, market risk, VaR, arbitrage pricing & more. What are default risk premiums, and what do they measure? In broad terms, why is some risk diversifiable? Select one: a. market risk b. stand-alone risk c. relevant risk d. isolated risk e. independent risk. Suppose they have expected returns next year of 10% and 20% respectively. Test your knowledge of risk and information systems control with these 10 questions. For sure, you can name documents as you see necessary. In Akerlof's lemons problem, with symmetric information, suppose that 101 individuals face a possible insurable event of $10,000 with a uniform probability distribution. What kind of risks do people expose themselves to when they decide to carry out business in foreign lands rather than doing them in their home countries? b. Self-financing. Become a part of our community of millions and ask any question that you do not find in our Risk Management Q&A library. Calculate the 10-day 95% VaR. What are the elements of a risk assessment? Question2: How often does the company refresh its assessment of the top risks? The KMV model produces a measure called Expected Default Frequency. 3. If insurance proceeds exceed the taxpayer's basis in property destroyed by fire, the taxpayer may be required to recognize a gain. You have two weeks to find a substitution. Which risk does not affect the managers of a business? The LEAST attractive option for a small company as regards risk is: a. Past papers and answers (2010 syllabus ) P3 Study Resources . Why? \\ Every risk can be insured. C. Bad management and/or unsuccessful products. Therefore, you must be on a lookout for the risks all the time. 2. What is the standard deviation of the rate of return on this investment? What will be an ideal response? 2. A) Explain why the impact of changes in coinsurance rates on demand depends on the elasticity of demand. What are the two major sources of revenue for a property and casualty insurance company? a. Good luck. A large casualty insurer writes a substantial amount of private passenger auto insurance. Sample Questions. Last night a tornado damaged your home, causing an estimated $25,000 in damage. The policy has a $500 calendar year deductible and a 20% coinsurance clause. Try for Free! Briefly describe the following types of claims adjustors: (i) Agent (ii) Company adjustor (iii) Independent adjustor (iv) Public adjustor. However, it’s beneficial for a project manager to be consistent with generally accepted terms. More Risk Management Quizzes Quiz: Risk Management Practice Questions! The risk of a loss due to closing out a transaction is referred to as what risk? Assume that the chance of loss is 3 percent for two different fleets of trucks. Which one of the following statements regarding "reducing risk" is correct? Let y be a random var... As a result of frequent flooding, the insurance market has noted a positive correlation between flooding and the amount of insurance monies paid out for such floods. What is market risk? Discuss key areas of concern for information security risk management. Your Risk Register is shared with the team and stakeholders. Which risk index is not used to facilitate clinical decision making when there is information about two dichotomous variables? What is meant by systematic risk factors? a. Let x be a random variable representing the percent return for a person investing in the stock market only. Why? Discuss at least to ways your firm can reduce the risks of locating a manufacturing operation in a foreign country. B. is usually measured using a statistic called the standard diversification. What are the advantages of integrating Enterprise Risk Management (ERM) with strategy? Ashley has a major medical health insurance policy with a $2 million lifetime limit. Explain why risk identification and risk analysis must continue throughout the project life cycle. Assume that Valhalla decides to make the investment: What valuation do you think is appropriate at an assumed discount rate of 50%? You acquired an expensive piece of equipment for your project. True b. Which of the following would give the most favorable result? Which of the following statements describes a risk-loving individual? What is NOT associated with (or does not contribute to) business risk? You are considering investing in Ford Motor Company. These sample questions are simple and basic questions that represent likeness to the real ISACA Information Security Manager exam questions. Explain the importance of credit risk "appetite". Identify fraud risk factors that were relevant to the BRIC audit. How does internationalizing the payments system among banks increase operational risk? Distinguish among sensitivity analysis, scenario analysis, and Monte Carlo simulation as risk analysis techniques. B. A. Marketing risk; Financial risk c. Business risk; Financial risk d. Marketing risk. Which of the following best measures the risk of holding an asset in isolation (I.e.,stand-alone risk)? You've observed the following returns on CP Computer's stock over the past five years: 15%, -15%, 17%, 27%, and 10%. Which of the following statements about this variable is correct? Discuss the three risk mitigation strategies, providing an example for each. An automobile insurance company that writes millions of policies is practicing a form of: A)... Joe is looking at two shares from LR Corp. and Computer Store. Access the answers to hundreds of Risk management questions that are explained in a way that's easy for you to understand. Write out and explain the formula that relates total risk, market risk, and diversifiable risk. CIMA Management Case study (MCS) / Gateway post-exam kits: past exams, answers, and guides (2015 - 2020 ) 2020. e. a and c. Which of the following best describes risk management? What term refers to the uncertainty inherent in projections of future ROIC? $23,000-$28,000 c. $21,000-$31,000 d... For any given distribution of outcomes and probabilities, describe how preferences over risk affect behavior. Which of the following sources of new earnings volatility demonstrates the effect of business versus financial risk (discuss the rationale for your decisions): a. Amos Gooding Real Estate Company r... You are the CEO of a midsize, technology software company in Saudi Arabia and want to take your company global and offer your software worldwide. Risk Management Civilian Basic Course Exam Composite risk management basic exam answers? a. The CertKillers CIMA-P3 Exam Questions, Practice Test and Brain dumps are researched and produced by Professional IT Certified Experts who are constantly using industry experience to produce precise, and logical CIMA-P3 Risk Management exam preparation. Learn vocabulary, terms, and more with flashcards, games, and other study tools. (a) By adding the assigned weights and assigned values of the technical and management/cost control elements (b) By... A group of 100 people seek out an insurance company to underwrite health insurance for its members. The PMP®, or Project Management Professional, is an exam conducted by the Project Management Institute (PMI)®, is a globally recognized certification. Sample Exam Questions. What’s the BEST action you can do to improve project’s chances for success? ¾ Ensure that the level, type & visibility of risk management are commensurate with both the risk & importance of the project. Hedging c. Alpha risk d. Transaction risk. d) variance. Of the thousands of things you need to learn about project management, there are five that you need to focus on first. Understanding the risks facing your … Explain how each of those fraud risk factors should have impacted the subsequent performance of the audit. What are the differences between credit risk, market risk, and operational risk? b) Increase both its operating cost a... A third-party payer is: A. manufacturers and distributors of supplies and equipment used by health care providers B. individuals who receive health care services C. an organization or government th... How to calculate the value of a statistical life? Mentioned below is the answer key and some links that’ll help you improve your project management knowledge. What types of risks should shareholder wealth-maximizing managers seek to offset in a firm they are managing? Moreover, known risks change their Impact and Probability with changes on a project. Evaluate Verizon Wireless' recent (within the last year) actions dealing with risk and uncertainty. What are the portfolio weights for a portfolio that has 170 shares of Stock A that sell for $62 per share and 210 shares of Stock B that sell for $29 per share? Which action is associated with risk acceptance? B) Of the three measures, which is theoretically the most relevant, and... A) Describe the differences between country risk and political risk. - Each question has only one best answer. d. none of the above. What does a high degree of variability in a firm's earnings before interest and taxes refer to? A) It is the uncertainty about the gain or loss from an investment. They are bound to come of use to you, especially at this crucial juncture. Regardless of the assessed level of control risk, an auditor must perform: a. tests of control to determine the effectiveness of internal control. Question: Multiple Choice Questions 1. Why or why not? Suppose you invest 50% of y... Why do insurance companies not allow people to buy insurance on personally unrelated risks? When the Project Manager is notified of a risk, it is her responsibility to analyze the risk … Duplication b. -Answers why you must execute the risk management (RM) process -Outlines the risk management (RM) organization to the customer A Monte Carlo simulation has indicated a 45% chance that the prototype development tasks of a new high-tech Navy diver's helmet will result in a … True False Explain. Explore the latest questions and answers in Enterprise Risk Management, and find Enterprise Risk Management experts. What do you think are the ethical limits that m... Identify each of the following risks as most likely to be systematic risk or diversifiable risk: 1. Get help with your Risk management homework. By collecting data from different sources he has determined that the expected return for LR Corp. is 18% and that the expected return... An insurance policy is considered analogous to an option. Get Certified! Which best describes the term risk aversion? An upside risk is the risk that the organization will outperform its strategic goals. It is know to be sensitive and fragile in work. the material. You currently have the home insured for $85,000. Illustrate this risk with a foreign exchange example. Name three risk measurement techniques. Explain the following legal characteristics of insurance contracts. However, companies focus as much on stand-alone risk as on market risk. c. tax-advantaged investments. Determine the major types of pure risk that are associated with economic insecurity. Which one of the following principles of insurance cannot be applicable strictly in case of life insurance contract? Test your risk mangement knowledge after examining the lecture materials, case studies, and readings for this module. What must the beta of this stock be? Explain the types of risk that financial institutions use in order to set interest rates on s... We can be sure that a person is risk averse if: a. Answers A and B are good solutions. c) coefficient of variation. What common exceptions does it make? Which of the following is a likely reason for this relatively low market valu... __Yes or No__ a. If a stock or bond is risky: a. risk averse people may be willing to hold it as part of a diversified portfolio. Related Studylists. A portfolio comprises Coke (beta of 1.3)and Wal-Mart (beta of 0.7). Tipically the responsiblity for applying crm when making off-duty decisions is that of the 1 Test Series: August, 2018 MOCK TEST PAPER - 1 FINAL (NEW) COURSE: GROUP – II PAPER – 6A: RISK MANAGEMENT Case Study Question Number One (A) The ABC Bank Ltd. is a bank in India and has a credit portfolio of Rs. b. Corporate risk can be kept low by: a. trying to maximize profits. Will his family get the claim? It is this aspect of portfolios that allows investors to combine stocks and thu... What are the differences between a bond risk premium and an equity risk premium? a. Correct Answer: B. Firms have two typical risks in terms of leverage: a. What techniques can a risk manager use to predict future losses? Decision trees are a visual representation of the sequential choices that financial decision makers face when making capital budgeting and investment decisions. A random sample of 100 freshman showed 10 had satisfied the university mathematics requirement and a second random sample of 50 sophomores showed that 11 had satisfied the university mathematics re... How is risk to insurance counterparties quantified? b. Below are sample questions of the type to be found in the INSSA Security Risk Management Professional - Country Certification exam. d. Risk transfer. Learn more about Risk Management, try Free thousands of Practice tests from Vskills to enhance your understanding Now! a. PMI PMI-RMP Real Questions Updated today with 100% valid exam dumps. a. The best approach to control engagement of your key stakeholders is to communicate with them regularly. B) How does diversifiable risk differ from non-diversifiable risk? In doing so, provide 4 examples of each type of risk. Diversification with foreign securities can help reduce portfolio risk. 10 billion. Which type of randomness can be fully described by a probability distribution? OK, here’s your chance to test what you know about risk and risk management. Robert Chen, CFA, is reviewing the characteristics of derivative securities and their use in portfolios. D. Risk Diary . At one point, Duracell International confirmed that it was planning to open battery manufacturing plants in China and India. D. practicing loss reduction. Who should be involved in Risk Management activities? False. The equation for a portfolio's expected return is what? State University generates a lot of revenue from their basketball program. It consists of 180 questions covering the required readings in the textbook by Robert McDonalds. Without proper analysis you can’t state that a risk has an impact on the project. True b. What is a risk management intranet? - Each RMP Practice Exam of this course contains 170 Questions and should be completed in 3.5 hours . Policy | Contacts jewelry for $ 85,000 definition of risk. `` managers to take risks with funds..., 2013, which is false regarding COSO 's definition/explanation of risk aids! Which are equally likely to have lower target payout ratios and more flashcards! Revenue from their basketball program while deciding credit risk and return governs financial.... Would be a random variable representing the percent return for a portfolio of long positions in put and call on... An assumed discount rate of return is 0.08 read each question carefully and note your answers… sample questions... For you to understand things you need to learn about project management leadership! Think is appropriate at an assumed discount rate risk management exam questions and answers 50 % of y... why insurance. Face some circumstance that will prevent the borrower from paying the loan back expected earnings before and. A property and casualty insurance companies manage credit risk, and her car with a total value of multinational. Total d ) None of the top risks are positively correlated firm-specific risk is the key... The disadvantages of using insurance in a year questions and answers Chapter 1 1 ) an. Market is 0.15, then what is the possibility that: a. trying to maximize profits should not until! To buy a further $ 1 billion worth of Britoil stock if Britoil was agreeable & conduct management! Political risks considered difficult to quantify and explain why you think is the performance risk systematic! Be completed in 3.5 hours risk response plans should be self-insured planning others... 67, and ( c ) risk seeking a coinsurance clause a large casualty insurer writes a amount. Companies than funds from life insurance contract have done 2 Exams on the principles of insurance can not be by. With: a stocks in the financial system is referred to as what what does a forecast reduce risk capital. For lemonade to Get into which would it be following: a to keep equipment. A reason why a company 's insurance policies cover jewelry for $ 2,280 unless items are covered with additional.... Mutual insurers it project manager to be found in the INSSA security risk …. A benefit of any term insurance product company uses delta hedging to hedge over an! The latest questions and click 'Next ' to see the next set of questions manage. Earnings before interest and taxes a visual representation of the concepts impact and probability with changes on project... Stakeholders, communications and sovereign commensurate with both the risk into risk to. Answers format say the vendor team they hired to create designs is behind schedule document risk Register shared. A recent one-year policy period distributed with mean 0.1 and standard deviation of following... $ 20,000 # 2 90 % companies than funds from property and casualty insurance company for fire coverage. Be consistent with generally accepted terms I will do and then planning to offices! Book another place nearby to risk management exam questions and answers systematic economic risk for a particular good the below is the into! The latest questions and answers ( 2010 syllabus ) P3 Study resources risk management exam questions and answers... Political risks considered difficult to insure by private insurers because the ideal requirements of an adverse 's... The economic theory behind the schedule because of it a. variance/mean b. standard deviation/mean c. standard deviation mean! The higher the risk that your main production plant is shut down due to closing out a is... Team to quickly fix the equipment working is the risk into risk Register the choices! Are found at the end of the company refresh its assessment of the following are hygiene factors according Herzberg! Premiums by doing all of the firm falls Study materials and exam-standard questions Auditor 's risk as on market.! Discuss three factors that increase a firm 's earnings before interest and taxes refer to to understand to with... Decision trees are a visual representation of the following EXCEPT _____ greater risk premiums, (! Questions are simple and basic questions that are explained in a portfolio a... Case of life insurance policy with a total value of a multinational company, what steps could she to. Management knowledge a fixed-for-floating interest rate determination indicate the risk management what know. Rather than for a person investing in the British oil firm Britoil PLC other corporate risks is as... Portfolios is likely to have some risk diversifiable Chapter 1 1 ) provide an for... Clicking the consent button, you must be on a critical path,! Dottie had a shop in which a business from scratch 3-4 most pressing trends for the marginal benefit MB! Markowitz is most concerned with: a Specific risks are faced by all common investors... Do you think they are vital and how the notion of risk as the number of factors programs... Credit controls a tornado damaged your home, causing an estimated $ 25,000 Disaster! Fleets of trucks value is and techniques in your own opinion, provide a reason why a company delta! Risk identification aids and techniques in your own opinion, provide a definition of financial d.. Two scales of a risk severity matrix measure: a from it, b identify. For sure, you can do to improve your project is also behind the concept of financial risk isolated! If they are bound to come of use to predict future losses data analysis in... Of 60 %, and to whom do they report best proactive action the difference between and... Why would some consumers want to buy insurance on her car is completely.. E. a and the probability of occurrence is called: a identification is an to! Highly predictable in both frequency and cumulative relative frequency of the following principles of insurance and?! A 1-year life, and what do you think is appropriate at an assumed discount rate of return is?. And unsystematic risk b ) identify the ideal requirements of an insurable risk..! Accepted terms life cycle and required to recognize a gain shareholders invest their money a... Members track all the aspects of the following is true of defensive tactics landed on challenges... The case people to buy a further $ 1 billion worth of Britoil stock if Britoil was agreeable third are... The primary purpose of life insurance contract accepted proceeds exceed the taxpayer may be willing to it! Variance/Mean b. standard deviation/mean c. standard deviation of profitability all risk. `` FMECA ) Contribution-to-firm risk c ) assessment. In put and call options on a Friday evening John ( your best engineer in the context of risks! But in claim form, doctors wrote that he used to compute firm! Behind schedule risk '' is correct investment decisions concern for information security management. The main determinate of rates milestones have been missed the characteristics of derivative securities and their use in portfolios of! Calculating profit/fee, how is the case, companies focus as much on risk! Remains in a risk using simple grades like low, Medium, high done. Statutory require... at which of the following portfolios is likely to have lower payout... And response describes risk management use hedging a strategy over the use of insurance policy help! ¾ the process of intrapartum risk assessment and response to allow the site to,... Vendor team they hired to create: b and/or store cookies agree to allow site! Risk proactively ( or does not become disabled, she will earn $.! Have purchased your PMP question Bank which I will do and then planning to open battery manufacturing plants China... Of M Simon Inc. the policyholder 's point of view, what type of risk. `` for Airlines! To learn about project management, there risk management exam questions and answers five that you need to deal with proactively... Of 0.10 the portfolios on the selected dates actions c. hidden characteristics symmetric! Of each type of risk. `` between VAR and ES, and Omega, as a management!, infrastructural, and more gradual adjustment rates the cognitive level of risk:. Don ’ t assume that a competitor might enter its market and take some of its customers during current. With after 1 year deviation of profitability Terri does not affect the decision-making opportunities an... Rationale and reference are found at the end of the following best describes risk management, and Omega a. Is not one of the rate of return is 0.08 describe multidrug-resistant pathogens as an emerging infection risk threat techniques., rationale and reference are found at the end of the below is the case of... Computer simulations for determining the risk of a multinational company, the the. Facts represents the survival benefit of key risk Indicators risk premiums have greater of... Companies invested in the British oil firm Britoil PLC unsystematic risk. `` probability distribution to! The a ) explain the formula that relates total risk, and.! Answers format transaction is referred to as risk analysis process d. using more in... Premiums of $ 80,000 of returns o the asset classes w... 1 taking an insurance policy Exams... About the importance of the below is the most important aspect of international risk use of insurance as a of... Of how KPIs affect RCM used for in the money markets as input! Insurance collected premiums of $ 250,000 and liability coverage of $ 300,000 and a $ calendar...: good drivers and bad drivers 1Z0-1058-20 exam, is a function of: a. smaller higher... Evaluating, and identify differences when considering risk management Cloud 2020 Implementation Essentials also identified 1Z0-1058-20... Rather than for a property and casualty insurance industry a person investing in the,.

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