Practice Exam for CAIB 1 Latest with complete solution
Question : Consideration is...
- The law of insurance
- A promise between parties
- A contract's binding force
- An exchange of something of value
Correct answer: d. An exchange of something of value
Question : A stock company is...
- A company that invests in other companies
- A company owned by stockholders who provide the capital
to start and run the company
- Is owned by customers of the company
- A company that owns livestock
Correct answer: b. A company owned by stockholders who
provide the capital to start and run the company
Question : The difference between pure and speculative risk
is...
- Speculative risk is insurable but pure risk is not
- Speculative risk means that there is a chance to gain or lose
whereas one can only lose with pure risk
- Speculative risk means that there is only the chance to lose
whereas pure risk means you have a chance to win too
- Speculative risk is a term invented by marine insurance
companies in 1864
Correct answer: b. Speculative risk means that there is a
chance to gain or lose whereas one can only lose with pure risk
Question : A legally enforceable agreement between 2 or
more parties is defined as...
- A contract
- An agreement
- A will
- A contract of consideration
Correct answer: a. A contract
Question : What are the 4 methods of dealing with risk?
Correct answer: Avoidance,
control, retention, transfer
Question : A reduction in value is called a...
- Loss
- Unlucky situation
- Claim
- Transfer
Correct answer: a. Loss
Question : What elements must be present to constitute a legal
contract?
- Parties to the contract, the contract itself, consideration
- Parties to the contract, a written document, consideration,
and legal purpose
- Agreement, consideration, legality of object, legal capacity,
genuine intention
- Competent parties, consideration, warranty, and legal
purpose
Correct answer: c. Agreement, consideration, legality of
object, legal capacity, genuine intention
Question : The act of intentionally giving up some right or
privilege is...
- A representation