Information Related to FIN 3360/6360 Midterm

• Exam is approximately: 20 multiple choice questions, 5 true/false questions, 2

short questions. Example questions can be found in the practice exam.

• Midterm will be based on lectures and textbook (Ch 1, 3, 4, 5, 9)

• You are allowed to use a 3X5 card to write notes, you can only have up to 100
words in your card. But having any questions or any numerical example from the
lecture PowerPoint and the practice exam on the card is illegal.

• Please also bring a calculator, and the State Farm Insurance Policy including the
cover page.

Topics Covered in the Class:

A. Auto Insurance
• Minimum insurance limits in California and ways to accomplish financial
responsibilities
• State Farm Auto Insurance Policy

B. Risk and Insurance

• Definition of Risk
• Pure Risk vs. Speculative Risk
• Risk Averse vs. Risk Seeker
• Exposure, Peril, and Hazards
• Moral Hazard
• Probability Distribution: Discrete and Continuous
• Frequency, Severity, Expected Loss, Standard Deviation/Variance, and
Correlation
• Law of Large Number
• Methods of Handling Pure Risk
• Insurance: the Definition
• Insurance vs. Gambling
• Ideal Requisities for Insurance

C. Insurance Contracts
• Agency Law
• Requirements of a Contract
• Distinguishing Characteristics of Insurance Contract
• Binders and Receipts
• Parts of an Insurance Contract