RMI 2302 Exam 1 Nyce 2022 with complete solution

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RMI 2302 Exam 1 Nyce 2022 with complete solution As the operations manager for American Airlines you have decided to invest in 10 new jets for the company's fleet. There are three outcomes for this... investment. What is the expected return on investment using the information below? Outcome Probability Return 1. .50 .15 2. .30 .25 3. .20 .10 -Answer- 0.17 Loss frequency describes which of the following? -Answer- Number of losses Risks affecting a large portion of the population at a given time are which of the following? -Answer- Fundamental risk Which of the following is a common pre-loss objective? -Answer- Economy Hazards may be categorized by which of the following groups? -Answer- Tangible (Physical) and intangible Tom is a college student at FSU. He has the option to buy a parking pass at the beginning of the year for $250. If Tom doesn't buy the pass, he has to park on the street or pay the valet parking service $5 per day. If Tom does not buy the parking pass, he expects to have to use the valet parking services 40 times. However, he may end up using the valet service up to 80 times. Tom decides that he would rather pay the $250 than risk not being able to find a spot on the street. Tom could be described as which of the following: -Answer- Risk averse Which of the following is NOT a type of funded retention? -Answer- Reserves, self-insurance, and captives Risk prevention methods are best applied to? -Answer- High frequency losses Donna has a home that is insured to its maximum value. She often leaves the door unlocked in case she forgets her keys. She knows that her insurance policy will pay for any losses if her home is robbed. Which of the following best applies to Donna? -Answer- Moral/morale hazard Risk reduction methods are best applied to? -Answer- High severity losses One of the examples used in "A Scientific View of Risk" is that 1 in 8 women will develop breast cancer. This statistic is for women who live to be 95 years old. This example measures the likelihood of developing cancer over an entire lifetime. This ignores some information, what information is ignored? -Answer- The number of days of life lost According to "Innovation Risk: How to Make Smarter Decisions", what is one of the major factors in determining the risks and benefits of innovation? -Answer- The infrastructure in which the innovation is introduced One of the public policy concerns associated with risk reduction in the reading "A Scientific View of Risk" is estimating the cost and benefits of risk reduction. For many risks, such as highway safety estimating the cost and benefits of risk reduction include: -Answer- Putting a value on a human life According to "Innovation Risk: How to Make Smarter Decisions", which of the following is NOT one of the five rules of thumb to minimizing risk? -Answer- Determine which risks are being faced According to "Innovation Risk: How to Make Smarter Decisions", mathematical modeling is more precise than which of the following? -Answer- Human cognition One of the core concepts of the reading "A Scientific View of Risk" is: -Answer- Risk reduction has both monetary and non-monetary costs According to "Innovation Risk: How to Make Smarter Decisions", the utility of a model depends on the model itself, why it's being used and which of the following? -Answer- Who is using the model According to "Innovation Risk: How to Make Smarter Decisions", you use models every day. Why is it that you don't recognize that you're using a model? -Answer- Models that apply to real-life situations are often applied semi-consciously Think about the following statement. "Innovations to make us feel safer often lead to us changing our habits because we feel safer, thereby increasing risk." Which of the following is an example of the statement? -Answer- Erin just paid ADT to install an alarm system in her house. Now, she can finally stop worrying about locking her doors at night According to "Innovation Risk: How to Make Smarter Decisions", which of the following is NOT an observable external factor measured by the Black-Scholes formula? -Answer- the Dow Jones Industrial Average The World Phone, Inc. currently has $100,000 to invest in new technology for the firm. There are three possible technologies the firm can invest in. Which of the following should The World Phone pursue? Investment A Probability / Outcome .40 / 15% .35 / 10% .25 / -7.5% Investment B Probability / Outcome .60 / 10% .30 / 20% .10 / -5% Investment C Probability / Outcome .50 / 15% .20 / 10% .30 / -5% -Answer- Investment B XYZ Corporation has $10M to invest. There are three investment opportunities they are considering. Each opportunity requires $10M investment. Which investment should XYZ pursue? Investment A: Probability / Outcome .50 / 15% .35 / 7.5% .15 / -10% Investment B: Probability / Outcome .45 / 15% .45 / 7.5% .10 / -10% Investment C: Probability / Outcome .45 / 20% .45 / 5% .10 / -10% -Answer- Investment C What is one weakness of the maximum likelihood principle? -Answer- Maximax or Minimin Principle [Show More]

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