Nature of Insurance, Risk, Perils and Hazards

Which of the following refers to a condition that may increase the chance of a loss?

A hazard

Which of the following describes the statement "The more times an event is repeated, the more predictable the outcome becomes"?

Law of Large Numbers

Moral hazard is described as the:

increased chance of a loss because of an insured's dishonest tendencies

Which of the following is a circumstance in which there is a possibility of both a loss or a gain?

Speculative Risk

 Which of the following is NOT considered a definition of risk?

The cause of a loss

Which of the following is considered to be a situation that has the potential for loss?

Loss exposure

Which type of risk is gambling?

SpeculativeRisk

A situation in which there is ONLY a chance of loss and no gain is a:

Pure Risk

Which of the following is NOT considered to be a definition of the term "loss"?

Probability that an event will occur

All of the following circumstances must be met for loss retention to be an effective risk management technique, EXCEPT:

Probability of loss is unknown

Which of the following is NOT an element of an insurable risk?

Loss must be catastrophic

Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies? 

Moral hazard

Which of these statements correctly describes risk? 

Pure risk is the only insurable risk

Which of the following would NOT be accomplished with the purchase of an insurance policy? 

Having all risks eliminated.

Restoring an insured to the same condition as before a loss is known as:

Principle of indemnity