Question 1

A lease on a real property structure will relieve the lessee of being responsible for any damage or loss to the leased premises.

Accepted Answer

A) True 
 B)False

Question 2

Assume that the physical property of a business is valued at $50,000. The company's commercial property policy contains a coinsurance clause with a stated percentage of 80 percent. The company insures the property for $30,000 (75 percent of the specified minimum). The company incurs a fire loss of $20,000. How much of the loss will the insurance company pay for?

Accepted Answer

A)  $0 
B)  $15,000 
C)  $20,000 
D)  $10,000 
A)  $0 
B)  $15,000 
C)  $20,000 
D)  $10,000

Question 3

Match the term with its definition.
-Coverage designed to provide liability and physical damage protection for a vehicle

Accepted Answer

A) automobile insurance 
B) coinsurance clause 
C) crime insurance 
D) design defect 
E) manufacturing defect
F)marketing defect
G)noneconomic damages
H)personal property
I)punitive damages 
A) automobile insurance 
B) coinsurance clause 
C) crime insurance 
D) design defect 
E) manufacturing defect
F)marketing defect
G)noneconomic damages
H)personal property
I)punitive damages

Question 4

Match the term with its definition.
-Coverage that reimburses a business for the loss of anticipated income following the interruption of business operations

Accepted Answer

A) business interruption insurance 
B) funds transfer fraud 
C) indemnification clause 
D) key-person life insurance 
E) personnel risks
F)reasonable (prudent person) standard
G)torts
H)workers' compensation insurance
I)workers' compensation legislation 
A) business interruption insurance 
B) funds transfer fraud 
C) indemnification clause 
D) key-person life insurance 
E) personnel risks
F)reasonable (prudent person) standard
G)torts
H)workers' compensation insurance
I)workers' compensation legislation

Question 5

Match the term with its definition.
-A loss arising from an inability to carry on normal operations due to a direct loss of property

Accepted Answer

A) actual cash value (ACV) 
B) commercial general liability (CGL) insurance 
C) direct loss 
D) disability buyout insurance 
E) disability insurance
F)indirect loss
G)loss avoidance
H)loss prevention
I)loss reduction
J)replacement value of property 
A) actual cash value (ACV) 
B) commercial general liability (CGL) insurance 
C) direct loss 
D) disability buyout insurance 
E) disability insurance
F)indirect loss
G)loss avoidance
H)loss prevention
I)loss reduction
J)replacement value of property

Question 6

Match the term with its definition.
-Choosing not to engage in hazardous activities

Accepted Answer

A) actual cash value (ACV) 
B) commercial general liability (CGL) insurance 
C) direct loss 
D) disability buyout insurance 
E) disability insurance
F)indirect loss
G)loss avoidance
H)loss prevention
I)loss reduction
J)replacement value of property 
A) actual cash value (ACV) 
B) commercial general liability (CGL) insurance 
C) direct loss 
D) disability buyout insurance 
E) disability insurance
F)indirect loss
G)loss avoidance
H)loss prevention
I)loss reduction
J)replacement value of property

Question 7

Match the term with its definition.
-The uncertainty associated with a situation where only loss or no loss can occur

Accepted Answer

A) all-risk approach 
B) business risk 
C) compensatory damages 
D) Economic damages 
E) health maintenance organization (HMO)
F)market risk
G)named-peril approach
H)peril
I)preferred provider organization (PPO)
J)pure risk 
A) all-risk approach 
B) business risk 
C) compensatory damages 
D) Economic damages 
E) health maintenance organization (HMO)
F)market risk
G)named-peril approach
H)peril
I)preferred provider organization (PPO)
J)pure risk

Question 8

Business interruption insurance provides coverage for loss of income following the interruption of business operations.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following benefits is NOT covered by workers' compensation insurance?

Accepted Answer

A)  Wages for a replacement employee 
B)  Rehabilitation expenses 
C)  Death benefits for employees' family 
D)  Loss of wages 
A)  Wages for a replacement employee 
B)  Rehabilitation expenses 
C)  Death benefits for employees' family 
D)  Loss of wages

Question 10

Pain and suffering, mental anguish, and loss of physical abilities are included in which type of damages in a tort case?

Accepted Answer

A)  Noneconomic 
B)  Compensatory 
C)  Economic 
D)  Punitive 
A)  Noneconomic 
B)  Compensatory 
C)  Economic 
D)  Punitive

Question 11

Small businesses are particularly vulnerable to employee fraud because of weak financial controls.

Accepted Answer

A) True 
 B)False

Question 12

Julie owns a clothing boutique in her hometown. She would like to expand her operations, so she is planning to launch an online store where customers from all over the world can browse her boutique's inventory and make purchases online. As Julie's friend, you have recommended that she purchase a cyber liability insurance policy. Explain to Julie why such a policy would benefit her.

Accepted Answer

Cyber liability policies protect busines

Question 13

Market risk is uncertainty associated with a situation where only loss or no loss can occur.

Accepted Answer

A) True 
 B)False

Question 14

Crime insurance is most critical for a small business when the

Accepted Answer

A)  business has weak financial controls. 
B)  firm is struggling. 
C)  owner has a personal distraction. 
D)  owner employs family members. 
A)  business has weak financial controls. 
B)  firm is struggling. 
C)  owner has a personal distraction. 
D)  owner employs family members.

Question 15

Identifying in an insurance policy the specific perils covered is a(n) _____ approach.

Accepted Answer

A)  no-risk 
B)  named-peril 
C)  coinsurance 
D)  all-risk 
A)  no-risk 
B)  named-peril 
C)  coinsurance 
D)  all-risk

Question 16

Only pure risk is insurable.

Accepted Answer

A) True 
 B)False

Question 17

Match the term with its definition.
-Buying insurance or making contractual arrangements that transfer risk to others

Accepted Answer

A) personal property 
B) proximate cause 
C) real property 
D) risk control 
E) risk financing
F)risk management
G)risk retention
H)risk transfer
I)self-insurance
J)torts 
A) personal property 
B) proximate cause 
C) real property 
D) risk control 
E) risk financing
F)risk management
G)risk retention
H)risk transfer
I)self-insurance
J)torts

Question 18

Wrongful acts or omissions for which an injured party can take legal action against the wrongdoer for monetary damages are called statutory liability.

Accepted Answer

A) True 
 B)False

Question 19

Match the term with its definition.
-Lessening the frequency, severity, or unpredictability of potential losses

Accepted Answer

A) actual cash value (ACV) 
B) commercial general liability (CGL) insurance 
C) direct loss 
D) disability buyout insurance 
E) disability insurance
F)indirect loss
G)loss avoidance
H)loss prevention
I)loss reduction
J)replacement value of property 
A) actual cash value (ACV) 
B) commercial general liability (CGL) insurance 
C) direct loss 
D) disability buyout insurance 
E) disability insurance
F)indirect loss
G)loss avoidance
H)loss prevention
I)loss reduction
J)replacement value of property

Question 20

Crisis planning is a form of risk transfer.

Accepted Answer

A) True 
 B)False

Exam 23: Managing Risk

A lease on a real property structure will relieve the lessee of being responsible for any damage or loss to the leased premises.

Match the term with its definition. -Coverage designed to provide liability and physical damage protection for a vehicle

Match the term with its definition. -Coverage that reimburses a business for the loss of anticipated income following the interruption of business operations

Match the term with its definition. -A loss arising from an inability to carry on normal operations due to a direct loss of property

Match the term with its definition. -Choosing not to engage in hazardous activities

Match the term with its definition. -The uncertainty associated with a situation where only loss or no loss can occur

Business interruption insurance provides coverage for loss of income following the interruption of business operations.

Which of the following benefits is NOT covered by workers' compensation insurance?

Pain and suffering, mental anguish, and loss of physical abilities are included in which type of damages in a tort case?

Small businesses are particularly vulnerable to employee fraud because of weak financial controls.

Market risk is uncertainty associated with a situation where only loss or no loss can occur.

Crime insurance is most critical for a small business when the

Identifying in an insurance policy the specific perils covered is a(n) _____ approach.

Only pure risk is insurable.

Match the term with its definition. -Buying insurance or making contractual arrangements that transfer risk to others

Wrongful acts or omissions for which an injured party can take legal action against the wrongdoer for monetary damages are called statutory liability.

Match the term with its definition. -Lessening the frequency, severity, or unpredictability of potential losses

Crisis planning is a form of risk transfer.

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, Ethics, and Social Entrepreneurship

Starting a Small Business

Franchises and Buyouts

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, Legal Structures, Alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Businesses

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firms Assets

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