1. Gina would like to buy a house. She will pay 10 percent of the cost of the house as a down payment and borrow the other 90 percent from a mortgage lender. The home will serve as collateral for the loan. The lender requires Gina to purchase property insurance on the home so that the collateral supporting the loan will be protected. This scenario illustrates which of the following benefits of insurance to society?

2. In addition to marketing life insurance, life insurers typically sell which of the following products?

I. Retirement annuities

II. Disability income insurance

3. Taylor Tobacco Company is concerned that the company may be held liable in a court of law and ordered to pay a large damage award. The characteristics of the judicial system that increase the frequency and severity of losses are known as
4. Which of the following statements about liability risks is (are) true?

I. Future income and assets can be attached to pay judgments if inadequate insurance is carried.

II. There is an upper limit on the amount of loss.
5. Which of the following statements about speculative risks is true?

6. All of the following are considered financial risks EXCEPT

7. Traditionally, risk has been defined as

8. In reviewing his company's operations, a risk manager noticed that all of the company's finished goods were stored in a single warehouse. The risk manager recommended that the finished goods be divided among three warehouses to prevent all of the finished goods from being destroyed by the same peril. Dividing the finished goods among three warehouses illustrates

9. All of the following are characteristics of insurance EXCEPT

10. Jim and Paula Franklin started a dry cleaning business. The business may be successful or it may fail. The type of risk that is present when either a profit or loss could occur is called.