LOMA 371 Exam QUESTIONS WITH COMPLETE
100% VERIFIED SOLUTIONS 2024/2025
Return on Equity (ROE) (measures operating efficiency) - Correct Answer = Net Income / Owners' Equity or = (Revenues - Expenses) / Owners' Equity Required Rate of Return - Correct Answer = Risk-free rate of return + Risk premium* (* this serves as the incentive for an investor to pursue a specific investment opportunity) Minimum Required Assets - Correct Answer = Minimum Required Reserves + Minimum Required Capital Credit Risks - Correct Answer default risk counterparty risk Market Risks - Correct Answer equity risk interest-rate risk reinvestment rate risk liquidity risk currency risk Underwriting Risks - Correct Answer pricing risk policyholder behavior risk Operational Risks - Correct Answer distribution risk human resources risk technology risk business process risk business partner risk 1 / 2
event risk Other Risks - Correct Answer strategy risk regulatory risk competition risk reputational risk Components of ERM - Correct Answer - A risk control process. (identify, evaluate, monitor, limit)
- Extreme event management. (reinsurrance)
- A risk accountability framework. (risk committee or CRO)
- A risk management culture. (risk appetite = qualitative and risk Tolerance = quanTitative)
- Strategic risk management.
- purchasing assets
- selling assets
- servicing assets
- development expenses
- acquisition expenses
- maintenance expenses
- overhead expenses
- / 2
Investment expenses - Correct Answer - costs of analyzing investment opportunities
General and Administrative expenses - Correct Answer Expenses for contractual benefits Operating expenses
Operating expenses - Correct Answer - development expenses