AS-05 (v) Actuarial Aspects of Risk Management Mock Test 08
Chapter 11 focuses on the solvency and profitability of an enterprise through effective capital management and risk management practices. It explains organizational risk, financial decision-making, enterprise risk assessment, and the importance of regular project risk reviews. The chapter discusses organizational flexibility as a tool for managing uncertainty, introduces the Model Top Ten (MTT) for prioritizing significant risks, and demonstrates EBIT calculations for business analysis. It also covers the Modigliani and Miller (MM) theory of capital structure, the systematic steps of risk assessment, and defines finance as the discipline concerned with the efficient allocation and management of financial assets and resources.
1. What is the title of Chapter 11?
A. Risk Measures
B. Risk Modelling
C. Solvency & Profitability of Enterprise, Management of Capital
D. Monitoring the Experience and Exposure to Risk
E. Risk Mitigation
2. Organizational risk spans which of the following?
A. Advertising budgets only
B. Tax filings only
C. Marketing campaigns
D. Office locations only
E. Leadership quality and depth, management and labour performance, retention and availability, organizational cost and cultural alignment
3. Which question addresses the trade-offs in terms of all costs, benefits, and risks among the available options?
A. Question 1
B. Question 4
C. Question 3
D. Question 5
E. Question 2
4. Regularly scheduled project risk reviews can be used to ensure what?
A. That no planning is done
B. That project risk is an agenda item at all project development and construction management meetings
C. That risks are ignored
D. That meetings are cancelled
E. That costs always increase
5. What does Organizational Flexibility help to mitigate?
A. Risks under conditions of uncertainty
B. Employee salaries
C. Tax liabilities
D. All project costs
E. Marketing budgets
6. Which model is based on the 10 most important risk types?
A. Model Sensitivity (MS)
B. Model Frequency Control (MFC)
C. Model Top Ten (MTT)
D. Model Loss Control (MLC)
E. Model Economic Capital (MEC)
7. In Example 1 (Mason Corporation), with sales $400,000, variable costs $330,000, and fixed costs $30,000, what is the EBIT?
A. $400,000
B. $70,000
C. $40,000
D. $330,000
E. $6,000
8. According to the MM (Modern View), the choice between equity financing and borrowing does not affect what?
A. The number of employees
B. The office location
C. The brand name
D. A firm's market value
E. The marketing budget
9. What is the fifth step in performing a risk assessment?
A. Determine risk tolerance
B. Identify objectives
C. Assess residual impact
D. Identify events
E. Evaluate the portfolio of risks and determine risk responses
10. Finance is described in the chapter as the study of:
A. Managing employees
B. Producing goods
C. Communicating information
D. Marketing products
E. Allocating assets
