Exam 4: Advanced Topics in Risk Management

Which of the following statements is (are)true with regard to probability analysis? I.If two events are independent,the occurrence of one event does not affect the occurrence of the second event. II.If two events are dependent,the occurrence of one event affects the occurrence of the second event.

Which of the following statements is (are)true with respect to the time value of money? I.Money received today is worth more than the same amount of money received in the future. II.The present value of a future amount is greater than the future amount.

Which of the following statements is (are)true regarding the net present value of a capital investment? I.Net present value does not consider time value of money. II.A positive net present value represents an increase in value to the firm.

Which of the following is a financial risk that may be faced by a business organization?

Calculating the present value of a future amount is called

Which of the following statements about the risk of terrorism in the United States is (are)true? I.Congress created a federal backstop for terrorism claims. II. Coverage for losses attributable to terrorism is not marketed by private insurers in the U.S.

ABC Company in considering a loss control investment.The project will cost $100,000.It will generate an after-tax net cash flow of $60,000 one year after investment and an after-tax net cash flow of $60,000 two years after investment.The present value of $1 received one year from today assuming a 6 percent rate is .9434.The present value of $1 received two years from today assuming a 6 percent interest rate is .8900.Assuming a discount rate of 6 percent,what is the net present value (NPV)of this project?

Which of the following is a demographic factor that has increased losses from climate change in the United States?

An emerging concern for risk managers is the greater volatility that has been observed in weather patterns-higher high temperatures,lower low temperatures,record rainfall,drought,etc.Collectively,this risk is called

A grid charting the potential frequency and severity of losses is called a