18. Which is true regarding the nature of probability? Probabilities deduced sol
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18. Which is true regarding the nature of probability? Probabilities deduced solely from historical data may change as new a. data are discovered or the environment changes b. Theoretical probabilities are only estimates whose accuracy depends on the size and representative nature of the samples considered C. Empirical probability distributions are constant as long as the physical conditions that generate them remain unchanged. d. The type of probability most commonly used by risk management professionals is theoretical probability 19. Which of the following is not a benefit of risk assurance to an organization? a. Reduced potential for financial surprises b. Enhanced organizational reputation c. Greater confidence in the long-term health and vitality of the organization d. Increased correlation of company sales with market volatility 20. Which one of the following requires the CEO and CFO of a publicly-traded company to certify that the financial statements are correct and requires that the public companies report operational risk to the company's stakeholders? a. The Financial Modernization Act b. The Sarbanes-Oxley Act c. The U.S. Securities and Exchange Commission d. The Dodd-Frank Act 21. An organization's cost of risk includes a. Cost of accidental losses not reimbursed by insurance or other outside sources b. Insurance premiums c. Costs of risk control techniques to prevent or reduce the size of accidental loses d. All of the above 22. Hazard risk is best described as a. Uncertainties associated with the organization's reduction in value resulting from the effects of accidental losses b. Uncertainties associated with the organization's financial activities c. Uncertainties associated with an organization's operations c. Uncertainties associated with the organization's long-term goals and managementExplanation / Answer
Q1.(A) probabilities deduced solely from historical data may change as new data are discovered or envirommental changes.
Q2.(A) reduced potential for financial surprices because instead risk management provides in the ability to track potential changes in risk vulnerabilities.
Q3. (C) U.S SECURITIES AND EXCHANGE Commision because this act required all publicly-traded companies to disclose relevant financial information, and established the Securities and Exchange Commission (SEC) to oversee securities markets.
Q4. (D) all of the above since in an organisation all these three are counted in cost from installinfg techniques to paying premiums.
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