Question 1

Match the term with its definition. Some terms may not be used.
-Insurance that provides a healthy partner the cash to buy out a partner who becomes ill

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 2

The company's ability to absorb losses will determine what smaller potential losses will be insured.

Accepted Answer

A) True 
 B)False

Question 3

Match the term with its definition. Some terms may not be used.
-A contractual clause that requires one party to assume the financial consequences of another party's legal liabilities

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 4

Property insurance that covers all direct damage to property except damage caused by perils specifically excluded is called CGL.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

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

Question 6

Since 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 7

Which action is part of the second step of a risk management program analysis?

Accepted Answer

A)  Classification of risks 
B)  Deciding on an action 
C)  Determining risk control methods 
D)  Systematic risk analysis 
A)  Classification of risks 
B)  Deciding on an action 
C)  Determining risk control methods 
D)  Systematic risk analysis

Question 8

Requiring all servers in a restaurant to know how to properly lift heavy objects is an example of loss

Accepted Answer

A)  avoidance. 
B)  control. 
C)  prevention. 
D)  reduction. 
A)  avoidance. 
B)  control. 
C)  prevention. 
D)  reduction.

Question 9

Match the term with its definition. Some terms may not be used.
-Laws that obligate an employer to pay employees for injury or illness related to employment, regardless of fault

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 10

Typically, the dollar values for employee lawsuits have start at

Accepted Answer

A)  $50,000 
B)  $100,000 
C)  $150,000 
D)  The amount differs from the above values. 
A)  $50,000 
B)  $100,000 
C)  $150,000 
D)  The amount differs from the above values.

Question 11

Flood insurance can be purchased for only real property.

Accepted Answer

A) True 
 B)False

Question 12

Assume a contract exists between Mr. Jones, a college professor, and his student, Mr. Smith. Jones provides a syllabus, instruction, tutoring, and assessments of learning but Smith fails the class. Which of the following elements is absent in this case?

Accepted Answer

A)  Existence of a legal duty between the parties. 
B)  Failure to provide the appropriate standard of care. 
C)  Presence of injury or damages. 
D)  Evidence that the negligent act is the proximate cause of the loss. 
A)  Existence of a legal duty between the parties. 
B)  Failure to provide the appropriate standard of care. 
C)  Presence of injury or damages. 
D)  Evidence that the negligent act is the proximate cause of the loss.

Question 13

Brenda expects there will be uncertainty regarding the outcome of her business decisions. The final result of those decisions will not be known until she has ______________, developed strategies, and committed resources to her business.

Accepted Answer

A)  secured financing 
B)  purchased inventory 
C)  identified the investment opportunity 
D)  performed market research 
A)  secured financing 
B)  purchased inventory 
C)  identified the investment opportunity 
D)  performed market research

Question 14

Match the term with its definition. Some terms may not be used.
-Coverage primarily against employee dishonesty

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 15

Crime insurance is most critical for a small business when

Accepted Answer

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

Question 16

Business interruption insurance is

Accepted Answer

A)  included in a PPO policy. 
B)  may be part of an umbrella liability policy. 
C)  not recognized as important by small business owners. 
D)  part of a CGL no fault coverage plan. 
A)  included in a PPO policy. 
B)  may be part of an umbrella liability policy. 
C)  not recognized as important by small business owners. 
D)  part of a CGL no fault coverage plan.

Question 17

Match the term with its definition. Some terms may not be used.
-Ways of coping with risk that are designed to preserve the assets and earning power 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 18

Monitoring social media is a form of risk transfer.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Securing insurance coverage for all major potential losses would involve making certain that insurance covers the full replacement value of the firm's real and personal property.

Accepted Answer

A) True 
 B)False

Exam 23: Managing Risk in the Small Business

Match the term with its definition. Some terms may not be used. -Insurance that provides a healthy partner the cash to buy out a partner who becomes ill

The company's ability to absorb losses will determine what smaller potential losses will be insured.

Match the term with its definition. Some terms may not be used. -A contractual clause that requires one party to assume the financial consequences of another party's legal liabilities

Property insurance that covers all direct damage to property except damage caused by perils specifically excluded is called CGL.

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

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

Which action is part of the second step of a risk management program analysis?

Requiring all servers in a restaurant to know how to properly lift heavy objects is an example of loss

Match the term with its definition. Some terms may not be used. -Laws that obligate an employer to pay employees for injury or illness related to employment, regardless of fault

Typically, the dollar values for employee lawsuits have start at

Flood insurance can be purchased for only real property.

Assume a contract exists between Mr. Jones, a college professor, and his student, Mr. Smith. Jones provides a syllabus, instruction, tutoring, and assessments of learning but Smith fails the class. Which of the following elements is absent in this case?

Brenda expects there will be uncertainty regarding the outcome of her business decisions. The final result of those decisions will not be known until she has ______________, developed strategies, and committed resources to her business.

Match the term with its definition. Some terms may not be used. -Coverage primarily against employee dishonesty

Crime insurance is most critical for a small business when

Business interruption insurance is

Match the term with its definition. Some terms may not be used. -Ways of coping with risk that are designed to preserve the assets and earning power of a firm

Monitoring social media is a form of risk transfer.

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

Securing insurance coverage for all major potential losses would involve making certain that insurance covers the full replacement value of the firm's real and personal property.

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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