Principles of Risk Management and Insurance, 13th Edition

Application Questions

1. Assume that the chance of loss is 3 percent for two different fleets of trucks. Explain how it is possible that objective risk for both fleets can be different even though the chance of loss is identical.

2. Several types of risk are present in the U.S. economy. For each of the following, identify the type of risk that is present. Explain your answer.

   1. The Department of Homeland Security alerts the nation of a possible attack by terrorists.

   2. A house may be severely damaged in a fire.

   3. A family head may be totally disabled in a plant explosion.

   4. An investor purchases 100 shares of Microsoft stock.

   5. A river that periodically overflows may cause substantial property damage to thousands of homes in the floodplain.

   6. Home buyers may be ...