TRUE OR FALSE

1) Risk management does not provide a framework for assessing opportunities for profit, as well as for gauging threats of loss

2) The most important measures for risk managers when they address potential losses that arise from uncertainty are usually those associated with frequency and severity of losses during a specified period of time.

3) The utility theory is utilized to compare two or more options. Thus, by its very nature, we refer to the utility theory as an “ordinal” theory, which rank orders choices, rather than “cardinal” utility, which has the ability to attach a number to even a single outcome where there are no choices involved.

4) The expected value is a sum of the products of two numbers, the outcomes and their associated probabilities. If the probability of a large outcome is very low then the expected value will also be low and vice versa.