Which of the following statements regarding covariance is correct?

Co-variances can take on positive, negative, or zero values

Covariance always lies in the range -1 to +1

Covariance, because it involves a squared value, must always be a positive number (or zero)

Low co-variances among returns for different securities leads to high portfolio risk

Co-variances can take on positive, negative, or zero values

Total portfolio risk is __________.

Equal to systematic risk plus diversifiable risk

Equal to systematic risk plus non-diversifiable risk

Equal to avoidable risk plus diversifiable risk

Equal to systematic risk plus unavoidable risk

Equal to systematic risk plus diversifiable risk

Mostly interested in his own commission

Can trade your stock without your permission

covers the insured against the loss in access of a stated amount, but only for losses as covered and defined in an underlying policy.

covers the insured against the loss in access of an actual amount, but only for profits as covered and defined in a predetermined planning.

covers the insured against the loss in access of an actual amount, but only for profits as covered and defined in an underlying policy.

covers all uninsured against the gain in access of a stated amount, but only for losses as covered and defined in an underlying policy.

covers the insured against the loss in access of a stated amount, but only for losses as covered and defined in an underlying policy.

Mutual entities, reciprocal or inter-insurance exchanges, public entity risk pools are all principal kinds of:

Property and liability insurance organizations

Property and expense insurance organizations

Feasibility and performance assurance organizations

Property and liability insurance organizations

Building and asset related organizations

The private pools can fall in which two categories:

Risk retention and purchasing groups

Risk retention group is:

An insurance entity formed by the members of the private pool primarily to provide commercial liability insurance to the members.

A public entity formed by the members of the public pool primarily to provide business risk competency to the members.

A business entity formed by the members of the private pool primarily to provide commercial asset insurance to the members.

An insurance entity formed by the members of the private pool primarily to provide commercial liability insurance to the members.

An insurance entity formed by the members of the public pool primarily to provide commercial expense insurance to the members.

The methods used for the premium rates establishment are:

Manual, judgmental and merit rating

Manual, judgmental and premium rating

Commercial, judgmental and merit rating

Manual, experimental and merit rating

Manual, judgmental and merit rating

Principal objectives of state statutes are:

restrict investments of insurance entities

prescribe methods of admitted asset recovery

acquisition of risk-based capitals

The reason behind, when an insurance entity may request permission from the domiciliary state regulatory authority to use a specific accounting practice in the preparation of its statutory financial statements, may include:

the entity wishes to depart from Statutory Accounting Practices (SAP)

the prescribes SAP address the accounting for transaction

The profitability of an insurance entity on a statutory basis is generally gauged by:

combined ratio and its operating ratio

single module ratio and its operating ratio

ABA CTFA Practice Test 12 - Free Online Exam Prep & Questions

A set of possible values that a random variable can assume and their associated probabilities of occurrence are referred to as __________.

Probability distribution

The expected return

The standard deviation

Co-efficient of variation

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