Question 1

When considering the feasibility and affordability of insuring small potential losses, which company program will impact this decision?

Accepted Answer

A)  ACV 
B)  FICA 
C)  Self-insurance 
D)  Workers' compensation 
A)  ACV 
B)  FICA 
C)  Self-insurance 
D)  Workers' compensation

Question 2

A policy for small businesses that do not qualify for a BOP that combines property insurance and commercial general liability insurance is called a

Accepted Answer

A)  personal policy. 
B)  package policy. 
C)  health policy. 
D)  business owner's policy. 
A)  personal policy. 
B)  package policy. 
C)  health policy. 
D)  business owner's policy.

Question 3

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:

Accepted Answer

A)  risk. 
B)  pure risk. 
C)  business risk. 
D)  market risk. 
A)  risk. 
B)  pure risk. 
C)  business risk. 
D)  market risk.

Question 4

Match the term with its definition. Some terms may not be used.
-The cost of replacing personal property and rebuilding real property at today's prices

Accepted Answer

A) Actual cash value 
B) Aggregate stop loss limit 
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
K)Specific stop loss limit 
A) Actual cash value 
B) Aggregate stop loss limit 
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
K)Specific stop loss limit

Question 5

Match the term with its definition. Some terms may not be used.
-A managed-care network providing health insurance that is less expensive but more limiting in choices of medical providers

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 6

Beth has started an elder care service. Employees work with persons who are not ready to leave their home but have some disability that prevents them from being fully mobile. What should Beth consider in managing the associated risk?

Accepted Answer

The company should identify ways for ris

Question 7

Business risk is the possibility of losses associated with the assets and earnings potential of a company, including the firm's reputation.

Accepted Answer

A) True 
 B)False

Question 8

Match the term with its definition. Some terms may not be used.
-Keeping a loss from happening

Accepted Answer

A) Actual cash value 
B) Aggregate stop loss limit 
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
K)Specific stop loss limit 
A) Actual cash value 
B) Aggregate stop loss limit 
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
K)Specific stop loss limit

Question 9

Match the term with its definition. Some terms may not be used.
-The typical standard of care, based on what a reasonable or prudent person would have done under similar circumstances

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 10

Business interruption insurance pays for lost income following the interruption of business operations.

Accepted Answer

A) True 
 B)False

Question 11

Match the term with its definition. Some terms may not be used.
-Coverage for general liability loss exposure

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 12

Match the term with its definition. Some terms may not be used.
-Coverage that provides benefits upon the disability of a firm's partner or other key employee

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 13

ACV refers to the depreciated value of a property.

Accepted Answer

A) True 
 B)False

Question 14

After discussing the risk management process, list specific areas of concern for each step.

Accepted Answer

The five steps required for a program an

Question 15

Match the term with its definition. Some terms may not be used.
-A defect resulting from a problem that occurs during the manufacturing process, causing the product to subsequently not be made according to specifications

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 16

Match the term with its definition. Some terms may not be used.
-An insurance term that refers to the depreciated value of property

Accepted Answer

A) Actual cash value 
B) Aggregate stop loss limit 
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
K)Specific stop loss limit 
A) Actual cash value 
B) Aggregate stop loss limit 
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
K)Specific stop loss limit

Question 17

Richard must carry workers' compensation insurance to fulfill his ________________ obligation.

Accepted Answer

A)  professional liability 
B)  tort liability 
C)  contractual liability 
D)  statutory liability 
A)  professional liability 
B)  tort liability 
C)  contractual liability 
D)  statutory liability

Question 18

A defect resulting from failure to convey to the user that hazards are associated with a product or to provide adequate instructions on safe product use is known as a(n)

Accepted Answer

A)  marketing defect. 
B)  manufacturing defect. 
C)  design defect. 
D)  engineering defect. 
A)  marketing defect. 
B)  manufacturing defect. 
C)  design defect. 
D)  engineering defect.

Question 19

Identifying in an insurance policy the specific perils covered is a __________ 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 20

Specific and aggregate stop loss limits would be the best insurance plans of small businesses which have at least 80 employees.

Accepted Answer

A) True 
 B)False

Exam 23: Managing Risk in the Small Business

When considering the feasibility and affordability of insuring small potential losses, which company program will impact this decision?

A policy for small businesses that do not qualify for a BOP that combines property insurance and commercial general liability insurance is called a

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:

Match the term with its definition. Some terms may not be used. -The cost of replacing personal property and rebuilding real property at today's prices

Match the term with its definition. Some terms may not be used. -A managed-care network providing health insurance that is less expensive but more limiting in choices of medical providers

Beth has started an elder care service. Employees work with persons who are not ready to leave their home but have some disability that prevents them from being fully mobile. What should Beth consider in managing the associated risk?

Business risk is the possibility of losses associated with the assets and earnings potential of a company, including the firm's reputation.

Match the term with its definition. Some terms may not be used. -Keeping a loss from happening

Match the term with its definition. Some terms may not be used. -The typical standard of care, based on what a reasonable or prudent person would have done under similar circumstances

Business interruption insurance pays for lost income following the interruption of business operations.

Match the term with its definition. Some terms may not be used. -Coverage for general liability loss exposure

Match the term with its definition. Some terms may not be used. -Coverage that provides benefits upon the disability of a firm's partner or other key employee

ACV refers to the depreciated value of a property.

After discussing the risk management process, list specific areas of concern for each step.

Match the term with its definition. Some terms may not be used. -A defect resulting from a problem that occurs during the manufacturing process, causing the product to subsequently not be made according to specifications

Match the term with its definition. Some terms may not be used. -An insurance term that refers to the depreciated value of property

Richard must carry workers' compensation insurance to fulfill his ________________ obligation.

A defect resulting from failure to convey to the user that hazards are associated with a product or to provide adequate instructions on safe product use is known as a(n)

Identifying in an insurance policy the specific perils covered is a __________ approach.

Specific and aggregate stop loss limits would be the best insurance plans of small businesses which have at least 80 employees.

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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