Understanding Risk: Terminology and Types
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Questions and Answers

What is the term for a physical condition that increases the chance of loss?

  • A Priori
  • Moral
  • Hazard (correct)
  • Empirical

    • Which type of probability is determined on the basis of historical data?

  • Rare Probability
  • A Priori Probability
  • Empirical Probability (correct)
  • Judgmental Probability

    • What type of risk affects the entire risk economy or a large number of persons/groups within the economy?

  • Pure risk
  • Particular risk
  • Financial risk
  • Fundamental risk (correct)

    • Which category of risks includes the risk of premature death, old age, poor health, and unemployment?

    <p>Personal Risks</p> Signup and view all the answers

    What is the term for a possibility of loss or no loss, where the outcome cannot be measured by monetary terms?

    <p>Pure risk</p> Signup and view all the answers

    Which of the following best defines the concept of risk?

    <p>Possibility of risk adverse deviation from a desired outcome</p> Signup and view all the answers

    What distinguishes risk from chance?

    <p>Risk implies uncertainty and the possibility of adverse deviation, while chance implies uncertainty with favorable outcomes</p> Signup and view all the answers

    Which term refers to an unpredictable combination of hazard that may lead to loss?

    <p>Peril</p> Signup and view all the answers

    What is the definition of pure risk?

    <p>A risk involving only the possibility of financial loss or no loss</p> Signup and view all the answers

    How is risk related to uncertainty?

    <p>Risk involves uncertainty about an event's outcome</p> Signup and view all the answers

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