Question 1

Match the term with its definition.
-Compensatory damages for such losses as pain and suffering, mental anguish, and loss of physical abilities

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 2

Match the term with its definition.
-Making funds available to cover losses that cannot be eliminated by risk control

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 3

Because the small business owner needs to rely heavily on an insurance agent for advice, risk management and insurance management are synonymous.

Accepted Answer

A) True 
 B)False

Question 4

Match the term with its definition.
-A form of punishment beyond compensatory damages that intends to punish wrongdoers for gross negligence or callous disregard and to have a deterrent effect.

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 5

A customer's slip-and-fall injury would be covered by

Accepted Answer

A)  commercial general liability (CGL) insurance. 
B)  surety bonds. 
C)  business interruption insurance. 
D)  commercial property coverage. 
A)  commercial general liability (CGL) insurance. 
B)  surety bonds. 
C)  business interruption insurance. 
D)  commercial property coverage.

Question 6

Which of the following terms describes land and anything physically attached to the land, such as buildings?

Accepted Answer

A)  Real property 
B)  Personal property 
C)  Replacement value of property 
D)  Actual cash value 
A)  Real property 
B)  Personal property 
C)  Replacement value of property 
D)  Actual cash value

Question 7

Discuss the value of business interruption insurance to a small business. Why do you think many owners fail to appreciate the importance of this coverage?

Accepted Answer

Business interruption insurance provides

Question 8

The striking dock workers on the West Coast refused to unload the ships carrying merchandise for retail stores. These stores suffered loss of revenue during the Christmas season, their highest earnings period of the year. This revenue reduction is a(n) _____ loss that _____ be covered by insurance.

Accepted Answer

A)  direct; can 
B)  indirect; can 
C)  direct; cannot 
D)  indirect; cannot 
A)  direct; can 
B)  indirect; can 
C)  direct; cannot 
D)  indirect; cannot

Question 9

Risk financing focuses on making funds available for losses that cannot be eliminated by risk control.

Accepted Answer

A) True 
 B)False

Question 10

Discuss the differences between business risk, market risk, and pure risk.

Accepted Answer

•	Business risk. Business risk is the po

Question 11

A policy to protect businesses against the broad range of loss exposures arising from their use of the Internet and their holding of confidential information is called a _____ policy.

Accepted Answer

A)  social media liability 
B)  cyber liability 
C)  employment practices 
D)  business owner's 
A)  social media liability 
B)  cyber liability 
C)  employment practices 
D)  business owner's

Question 12

Patrick has a great idea for a new business venture. Even after conducting research, he is not certain whether he can make a go of it. Patrick is concerned about _____ risk.

Accepted Answer

A)  credit 
B)  pure 
C)  business 
D)  market 
A)  credit 
B)  pure 
C)  business 
D)  market

Question 13

Risk is the "possibility of suffering harm or pain."

Accepted Answer

A) True 
 B)False

Question 14

Business interruption insurance is

Accepted Answer

A)  required as part of a property insurance policy. 
B)  may be part of an umbrella liability policy. 
C)  not recognized as important by many small business owners. 
D)  part of a commercial general liability (CGL) insurance policy. 
A)  required as part of a property insurance policy. 
B)  may be part of an umbrella liability policy. 
C)  not recognized as important by many small business owners. 
D)  part of a commercial general liability (CGL) insurance policy.

Question 15

Actual cash value (ACV) refers to the depreciated value of a property.

Accepted Answer

A) True 
 B)False

Question 16

Philip leases retail space in a building owned by Roger. The lease agreement contains a(n) _____ clause excusing Roger from responsibility for any financial consequences of Philip's actions.

Accepted Answer

A)  premises liability 
B)  indemnification 
C)  operations liability 
D)  Lessor's release of action 
A)  premises liability 
B)  indemnification 
C)  operations liability 
D)  Lessor's release of action

Question 17

Risk retention entails financing all or part of a loss from a company's cash flows.

Accepted Answer

A) True 
 B)False

Question 18

Match the term with its definition.
-Laws that obligate an employer to pay employees for injury or illness related to employment, regardless of fault

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 19

Dan bought a $500,000 marina two years ago and obtained $400,000 of property insurance. Recently, economic improvements on the lake have raised the property's value to $550,000 (the good news). But the general store had a fire causing $100,000 worth of damage (the bad news). How much will the insurance company pay to repair the store since Dan has a coinsurance clause with a stated percentage of 80 percent in the marina's policy?

Accepted Answer

Under the coinsurance clause, Dan agreed

Question 20

Match the term with its definition.
-Any property other than real property, including machinery, equipment, inventory, and vehicles

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

Exam 23: Managing Risk

Match the term with its definition. -Compensatory damages for such losses as pain and suffering, mental anguish, and loss of physical abilities

Match the term with its definition. -Making funds available to cover losses that cannot be eliminated by risk control

Because the small business owner needs to rely heavily on an insurance agent for advice, risk management and insurance management are synonymous.

Match the term with its definition. -A form of punishment beyond compensatory damages that intends to punish wrongdoers for gross negligence or callous disregard and to have a deterrent effect.

A customer's slip-and-fall injury would be covered by

Which of the following terms describes land and anything physically attached to the land, such as buildings?

Discuss the value of business interruption insurance to a small business. Why do you think many owners fail to appreciate the importance of this coverage?

The striking dock workers on the West Coast refused to unload the ships carrying merchandise for retail stores. These stores suffered loss of revenue during the Christmas season, their highest earnings period of the year. This revenue reduction is a(n) _____ loss that _____ be covered by insurance.

Risk financing focuses on making funds available for losses that cannot be eliminated by risk control.

Discuss the differences between business risk, market risk, and pure risk.

A policy to protect businesses against the broad range of loss exposures arising from their use of the Internet and their holding of confidential information is called a _____ policy.

Patrick has a great idea for a new business venture. Even after conducting research, he is not certain whether he can make a go of it. Patrick is concerned about _____ risk.

Risk is the "possibility of suffering harm or pain."

Business interruption insurance is

Actual cash value (ACV) refers to the depreciated value of a property.

Philip leases retail space in a building owned by Roger. The lease agreement contains a(n) _____ clause excusing Roger from responsibility for any financial consequences of Philip's actions.

Risk retention entails financing all or part of a loss from a company's cash flows.

Match the term with its definition. -Laws that obligate an employer to pay employees for injury or illness related to employment, regardless of fault

Match the term with its definition. -Any property other than real property, including machinery, equipment, inventory, and vehicles

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Starting a Small Business

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The Business Plan: Visualizing the Dream

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Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

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Building Customer Relationships

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The striking dock workers on the West Coast refused to unload the ships carrying merchandise for retail stores. These stores suffered loss of revenue during the Christmas season, their highest earnings period of the year. This revenue reduction is a(n) _ loss that _ be covered by insurance.