Question 1

Match the term with its definition. Some terms may not be used.
-Buying insurance or making contractual arrangements that transfer risk to others

Accepted Answer

A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 2

After explaining the different types of property and losses, which ones were an issue for Sandy Whann, owner of Leidenheimer Baking Company?

Accepted Answer

There are two general types of property.

Question 3

To evaluate an insurance program, which question should be answered first?

Accepted Answer

A)  How much coverage is adequate? 
B)  What kinds of risk can be covered by insurance? 
C)  What types of coverage should be purchased? 
D)  What pricing is available? 
A)  How much coverage is adequate? 
B)  What kinds of risk can be covered by insurance? 
C)  What types of coverage should be purchased? 
D)  What pricing is available?

Question 4

Match the term with its definition. Some terms may not be used.
-Identifying the specific perils covered in a property insurance policy

Accepted Answer

A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 5

Match the term with its definition. Some terms may not be used.
-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)Partially self-funded program
I)Proximate cause
J)Punitive damages
K)Workers' compensation legislation 
A) Automobile insurance 
B) Coinsurance clause 
C) Crime insurance 
D) Design defect 
E) Manufacturing defect
F)Marketing defect
G)Noneconomic damages
H)Partially self-funded program
I)Proximate cause
J)Punitive damages
K)Workers' compensation legislation

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Match the term with its definition. Some terms may not be used.
-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) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 8

Concern about the replacement value is considered in which principle of a sound insurance program?

Accepted Answer

A)  Identify business risks that can be insured. 
B)  Secure insurance coverage for all major potential losses. 
C)  Consider the feasibility and affordability of insuring smaller potential losses. 
D)  Review and evaluate. 
A)  Identify business risks that can be insured. 
B)  Secure insurance coverage for all major potential losses. 
C)  Consider the feasibility and affordability of insuring smaller potential losses. 
D)  Review and evaluate.

Question 9

A contractual clause that requires one party to assume the financial consequences of another party's legal liabilities is called a

Accepted Answer

A)  worker's compensation clause. 
B)  extra clause. 
C)  indemnification clause. 
D)  tort. 
A)  worker's compensation clause. 
B)  extra clause. 
C)  indemnification clause. 
D)  tort.

Question 10

The cost to replace or replicate property at today's prices is described by________.

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 11

Business risks can be classified into two broad categories-asset risk and pure risk.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Doug's BOP on his fishing guide business excludes property losses due to the wakes of other fishing boats. This example illustrated the ____ approach to property insurance.

Accepted Answer

A)  foreseen risk 
B)  insurance-to-value 
C)  all-risk 
D)  named-peril 
A)  foreseen risk 
B)  insurance-to-value 
C)  all-risk 
D)  named-peril

Question 14

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

Accepted Answer

Pure risk is the uncertainty associated

Question 15

Mistakes that an employee makes in assembling a product for a customer could be a(n)

Accepted Answer

A)  employee liability. 
B)  operations liability. 
C)  premises liability. 
D)  product liability. 
A)  employee liability. 
B)  operations liability. 
C)  premises liability. 
D)  product liability.

Question 16

Match the term with its definition. Some terms may not be used.
-A negligent act that is the clear cause of damages sustained

Accepted Answer

A) Business interruption insurance 
B) Business owner's policy 
C) Commercial general liability insurance 
D) Disability insurance 
E) Indemnification clause
F)Key-person life insurance
G)Package policy
H)Personnel risks
I)Proximate cause
J)Reasonable standard
K)Workers' compensation insurance 
A) Business interruption insurance 
B) Business owner's policy 
C) Commercial general liability insurance 
D) Disability insurance 
E) Indemnification clause
F)Key-person life insurance
G)Package policy
H)Personnel risks
I)Proximate cause
J)Reasonable standard
K)Workers' compensation insurance

Question 17

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

Accepted Answer

A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 18

Match the term with its definition. Some terms may not be used.
-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)Partially self-funded program
I)Proximate cause
J)Punitive damages
K)Workers' compensation legislation 
A) Automobile insurance 
B) Coinsurance clause 
C) Crime insurance 
D) Design defect 
E) Manufacturing defect
F)Marketing defect
G)Noneconomic damages
H)Partially self-funded program
I)Proximate cause
J)Punitive damages
K)Workers' compensation legislation

Question 19

Match the term with its definition. Some terms may not be used.
-The possibility of losses associated with the assets and earnings potential of a firm

Accepted Answer

A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 20

Harold's ownership of a moving van for use in his business represents which form of risk?

Accepted Answer

A)  Uninsurable risk 
B)  Pure risk 
C)  Market risk 
D)  Insurable risk 
A)  Uninsurable risk 
B)  Pure risk 
C)  Market risk 
D)  Insurable risk

Exam 23: Managing Risk in the Small Business

Match the term with its definition. Some terms may not be used. -Buying insurance or making contractual arrangements that transfer risk to others

After explaining the different types of property and losses, which ones were an issue for Sandy Whann, owner of Leidenheimer Baking Company?

To evaluate an insurance program, which question should be answered first?

Match the term with its definition. Some terms may not be used. -Identifying the specific perils covered in a property insurance policy

Match the term with its definition. Some terms may not be used. -Coverage designed to provide liability and physical damage protection for a vehicle

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

Match the term with its definition. Some terms may not be used. -The uncertainty associated with a situation where only loss or no loss can occur

Concern about the replacement value is considered in which principle of a sound insurance program?

A contractual clause that requires one party to assume the financial consequences of another party's legal liabilities is called a

The cost to replace or replicate property at today's prices is described by________.

Business risks can be classified into two broad categories-asset risk and pure risk.

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

Doug's BOP on his fishing guide business excludes property losses due to the wakes of other fishing boats. This example illustrated the ____ approach to property insurance.

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

Mistakes that an employee makes in assembling a product for a customer could be a(n)

Match the term with its definition. Some terms may not be used. -A negligent act that is the clear cause of damages sustained

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

Match the term with its definition. Some terms may not be used. -A form of punishment beyond compensatory damages that intends to punish wrongdoers for gross negligence or callous disregard and to have a deterrent effect.

Match the term with its definition. Some terms may not be used. -The possibility of losses associated with the assets and earnings potential of a firm

Harold's ownership of a moving van for use in his business represents which form of risk?

The Entrepreneurial Life

Integrity and Ethics: Foundations for Success in Small Business

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 Business

Professional Management and the Small Business

Managing Human Resources

Managing Operations

Managing the Firms Assets

A: Managing Risk in the Small Business

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