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LLQP (Insurance Licence) Insurance Licensing — practice questions

Explore 30 free Insurance Licensing questions in LLQP (Insurance Licence) Finance. Open each question or exercise to read its content, reference answers and available explanation.

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Insurance Licensing questions and exercises with answers

Showing questions 1–30 of 30.

A reduction in the risk or exposure a firm has to volatility is called a:Read the answer and worked solution →The basic reason firms hedge is to protect themselves against:Read the answer and worked solution →Signing a multi year supply agreement to fix input prices is hedging with a:Read the answer and worked solution →A coffee chain buying its own coffee farm to control input cost is practising:Read the answer and worked solution →Although it reduces commodity price risk, vertical integration is described as:Read the answer and worked solution →An agreement to trade an asset on a future date at a price locked in today is a:Read the answer and worked solution →Compared with a private long term contract, a futures contract avoids:Read the answer and worked solution →Futures exchanges protect themselves by requiring traders to post:Read the answer and worked solution →Futures contracts are described as standardized, which means each has a fixed:Read the answer and worked solution →A business that offsets risk through its own operations rather than a market instrument uses a:Read the answer and worked solution →Acting on the terms of an option contract to buy or sell the asset is called:Read the answer and worked solution →The price at which an option holder may buy or sell the asset is the:Read the answer and worked solution →The amount the buyer pays to acquire an option is called the:Read the answer and worked solution →An option that may be exercised at any time up to expiry is called:Read the answer and worked solution →An option that may be exercised only on the expiration date is called:Read the answer and worked solution →The labels American and European for options refer to exercise style, not to:Read the answer and worked solution →Options are divided into how many main categories?Read the answer and worked solution →An option giving the owner the right, but not the obligation, to buy an asset is a:Read the answer and worked solution →An option giving the owner the right, but not the obligation, to sell an asset is a:Read the answer and worked solution →The most common option contracts are written on:Read the answer and worked solution →The financial manager's job is described as maximising the value of the firm for its:Read the answer and worked solution →Debt holders of a company expect interest to be paid and the return of their:Read the answer and worked solution →Catch the hedging toolsRead the answer and worked solution →Pop the option wordsRead the answer and worked solution →Run the hedging gatesRead the answer and worked solution →Slice the risk termsRead the answer and worked solution →Right to buy or sellRead the answer and worked solution →Sort the hedging ideasRead the answer and worked solution →Type the numberRead the answer and worked solution →Risk management bingoRead the answer and worked solution →

Worked practice questions

A reduction in the risk or exposure a firm has to volatility is called a:

  1. Hedge
  2. Hurdle
  3. Holder
  4. Header
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Correct answer: A. Hedge

1. The firm wants less uncertainty, not more. 2. Any step that cuts exposure counts. 3. That step is a hedge. _Source: OpenStax Principles of Finance, Chapter 20, Risk Management and the Financial Manager._

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The basic reason firms hedge is to protect themselves against:

  1. Listings
  2. Losses
  3. Lenders
  4. Licences
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Correct answer: B. Losses

1. Prices and rates can move against a business. 2. Hedging limits the damage when they do. 3. So firms hedge against losses. _Source: OpenStax Principles of Finance, Chapter 20, Risk Management and the Financial Manager._

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Signing a multi year supply agreement to fix input prices is hedging with a:

  1. Long term contract
  2. Long term deposit
  3. Long term dividend
  4. Long term discount
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Correct answer: A. Long term contract

1. Both sides agree a price in advance. 2. Buyer and seller each escape price swings. 3. That tool is a long term contract. _Source: OpenStax Principles of Finance, Chapter 20, Risk Management and the Financial Manager._

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More Finance topics

FinanceRisk Management and Hedging