Insurance Product online mcq with answer practice set

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Exam Question

What is the method of handling risk?

1. avoidance
1. loss control
2. retention
4. insurance

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Answer 4. insurance

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Exam Question

Which of the following is not characteristic of factoring

1. Factoring is possible in case of bad debts
2. Credit rating is mandatory
3. It is a method of offbalance sheet financing
4. Cost of factoring is never equal

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Answer 1. Factoring is possible in case of bad debts

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Exam Question

Forfeiting is beneficial to banks because:

1. Lower credit administration and credit follow up
2. It helps in maintaining liquidity
3. It helps bank to offer competitive interest rates
4. Increases assets base

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Answer 1. Lower credit administration and credit follow up

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Exam Question

In case of Forfeiting exporter has to bear the following cost:

1. Commitment fee
2. Interest
3. Commission
4. Dividends

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Answer 1. Commitment fee

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Exam Question

Liquidity risk pertains to timing mismatches between cash inflows and outflows is known as

1. gap risk
2. Commercial risk
3. Personal risk
4. Business Risk

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Answer 1. gap risk

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Exam Question

Which of the following is not part of risk management process?

1. identify and evaluate frequency and severity of losses
2. choosing and implementing risk management methods
3. Shelving a business plan due to high risk
4. monitoring the performance and suitability of the methods

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Answer 3. Shelving a business plan due to high risk

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Exam Question

Institute cargo Clause C covers loss of or damage to the goods caused by

1. Fire or explosion
2. Theft, pilferage and non-delivery
3. Fresh and/or rain and/or river water damage
4. Hook, oil, mud, acid and damage by other cargo

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Answer 1. Fire or explosion

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Exam Question

Which policy covers all risks of loss of or damage to the goods insured and is the widest cover

1. Institute Cargo Clause A
2. Institute Cargo Clause B
3. Institute Cargo Clause C
4. War and Strikes, Riots and Civil Commotion (SRCC) Clause

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Answer 1. Institute Cargo Clause A

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Exam Question

The principle of indemnity provides that

1. The insured should be paid for the loss he or she suffered and no more no less
2. The insured shall be paid exactly the face amount of the policy
3. People who cause accidents should pay for the loss that results
4. Only indemnity companies may issue contracts of indemnity

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Answer 4. Only indemnity companies may issue contracts of indemnity

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Exam Question

Which of the following is not an object of risk management?

1. Identify all potential risks
2. Identify high-impact/high priority risks
3. Document risk identification and analysis process
4. Assume risk

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Answer 4. Assume risk

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Exam Question

Which document sets out all the terms and conditions of the contract between the insurer and the insured

1. Certificate of Insurance
2. Insurance Broker’s Note
3. Insurance Policy
4. None of the above

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Answer 3. Insurance Policy

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Exam Question

…risk refers to uncertainty over total of cash flows due to possible changes in output and input prices.

1. Personal
2. Pure
3. Price
4. Credit

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Answer 3. Price

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Exam Question

World Banks’ subsidiary that guarantees against non-commercial risks is

1. MIGA
2. IDA
3. IRBD
4. IFC

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Answer 2. IDA

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Exam Question

Suppose the project has many hazards that could easily injure one or more persons and there is no method of avoiding the potential for damages. The project manager should consider…as a means of deflecting the risk.

1. abandoning the project
2. buying insurance for personal bodily injury
3. establishing a contingency fund
4. establishing a management reserve

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Answer 3. establishing a contingency fund

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Exam Question

Principle of Causa Proxima implies that

1. the insurer becomes liable to pay for loss if the insured peril or risk is the proximate cause of loss
2. the contracts of insurance only indemnify a loss resulting from risk covered under the Policy
3. the insurer becomes liable to pay for loss if the insured peril or risk is the exact cause of loss
4. the insurer becomes liable to pay for loss irrespective of the cause of loss

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Answer 1. the insurer becomes liable to pay for loss if the insured peril or risk is the proximate cause of loss

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Exam Question

Business firms face liability lawsuits when their:

1. Products injure consumers
2. Customers steal their inventory
3. Unions go on strike
4. Attorney fails to file legal document

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Answer 4. Attorney fails to file legal document

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Exam Question

In plain vanilla swap

1. one party paying a fixed interest rate and receiving a floating rate and the other party paying a floating rate and receiving a fixed rate
2. one party pays and receives a fixed interest rate and the other party paying a floating rate and receiving a fixed rate
3. Both parties pay and receive fixed interest rate
4. Both parties pay and receive floating interest rate

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Answer 1. one party paying a fixed interest rate and receiving a floating rate and the other party paying a floating rate and receiving a fixed rate

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Exam Question

In case of undisclosed factoring

1. client’s customers are not notified of the factoring arrangement
2. client’s customers are notified of the factoring arrangement
3. client is notified of the factoring arrangement
4. Client is not customers are not notified of the factoring arrangement

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Answer 1. client’s customers are not notified of the factoring arrangement

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Exam Question

A country that analyzes the probability of: (1) an uprising, (2) the election of a socialist nationalizing government, and (3) the stability of per capita income, is engaging in:

1. factor risk analysis
2. political situation analysis
3. country risk analysis
4. consumer purchasing power analysis

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Answer 2. political situation analysis

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Exam Question

Principle of Insurable interest refers to

1. All facts should be disclosed to insurer
2. The amount of interest to be paid by the insurer
3. No person can enter into a valid contract of insurance unless he has insurable interest in the object
4. None of the above

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Answer 2. The amount of interest to be paid by the insurer

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