Fin 381 Risk and Insurance Spring 2000 Dr. Gudikunst NAME____________________________ Mid-Term Examination 1a Instructions: Do all work in this test packet. Write answers in margin beside question number for T-F and Multiple Choice. TRUE-FALSE 1. The most common method of dealing with those risks facing an individual is probably risk retention. 2. The term "pure risk" describes a situation in which there is no chance of gain, but the possibility of loss or no loss only. 3. Insurers can partially eliminate morale hazard through the use of deductibles and other policy provisions which require the insured to bear a part of a loss. 4. The two fundamental characteristics of the insurance mechanism are transfer or shifting of risk and the sharing of losses on some equitable basis. 5. From the standpoint of the individual, insurance is a device in which a small certain cost is substituted for a large uncertain loss. 6. Insurance mobilizes funds for investment, since greater reserves must be main...