To Estimate Potential Property Losses, Risk Managers Must Know

question 50

Multiple Choice

To estimate potential property losses, risk managers must know:

• A) the accounting book value of property
• B) the replacement cost of property
• C) the actual cash value of property
• D) the original purchase price of property

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Definitions:

Smoothing Constant

A parameter used in exponential smoothing methods to adjust the level of smoothing applied to time series data, influencing the weight given to recent versus older observations.

Mean Absolute Deviation

The average of the absolute differences between each data value and the mean of the data set, measuring variability.

Forecast Error

The difference between the actual value and its forecasted value in a time series analysis.

Sum of Squares

The total squared difference between each observation and the mean of the data set, used in statistical analysis to measure variation.