Create correct distribution arise

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Reference no: EM132215533

1. Inaccuracies in our abilities to create a correct distribution arise from:

a. the nondiversifiable nature of risks.

b. our risk averse nature.

c. our inability to predict future outcomes accurately.

d. our inability to distinguish between hazards and perils.

e. the inability of insurers to insure all risks.

2. Which of the following can be used to give us a relative value of risk when the means of the distributions are not equal?

a. Confidence level

b. Standard deviation

c. Coefficient of variation

d. Semivariance

e. Range

3. If we compare one standard deviation with another distribution of equal mean but larger standard deviation, we could say that:

a. the risk of the distribution is equal.

b. the distribution with the larger standard deviation is riskier.

c. the distribution with the smaller standard deviation is riskier.

d. it is impossible to tell which distribution is riskier because the mean is equal.

e. the distribution with the higher severity would be riskier.

4. One measure of deviation or surprise is by calculating the expected squared distance of each of the various outcomes from their mean value. This is a weighted average squared distance of each possible value from the mean of all observations, where the weights are the probabilities of occurrence. Computationally, we do this by individually squaring the deviation of each possible outcome from the expected value, multiplying this result by its respective probability or likelihood of occurring, and then summing up the resulting products. Identify the measure produced.

a. Variance

b. Confidence

c. Standard deviation

d. Mode

e. Range

5. TRUE OR FALSE

1- The normal distribution or bell-shaped curve from statistics provides an example of a continuous probability distribution curve.

2-. VaR models provide an accurate measure of the losses that occur in extreme events.

Reference no: EM132215533

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