Question 1

Which statement is true regarding the reserves kept by insurance companies?

Accepted Answer

A)  They take several weeks to sell and convert to cash. 
B)  They are usually not enough to cover unexpected losses. 
C)  They are kept in financial assets such as stocks, bonds, and U.S. government securities. 
D)  They are more likely to be in the form of stocks when invested by life insurance companies. 
E)  They are more likely to be in the form of bonds when invested by property casualty insurance companies. 
A)  They take several weeks to sell and convert to cash. 
B)  They are usually not enough to cover unexpected losses. 
C)  They are kept in financial assets such as stocks, bonds, and U.S. government securities. 
D)  They are more likely to be in the form of stocks when invested by life insurance companies. 
E)  They are more likely to be in the form of bonds when invested by property casualty insurance companies.

Question 2

What is true regarding disability insurance?

Accepted Answer

A)  If you are unable to work due to an accident or injury, this insurance requires your employer to continue paying you your full salary. 
B)  This insurance only covers you for a limited amount of time, regardless of how long you are unable to work. 
C)  Few corporate insurance plans cover disability. 
D)  It covers a portion of your salary if you are unable to work due to an accident or illness. 
E)  It covers your full salary if you are unable to work due to an accident or illness. 
A)  If you are unable to work due to an accident or injury, this insurance requires your employer to continue paying you your full salary. 
B)  This insurance only covers you for a limited amount of time, regardless of how long you are unable to work. 
C)  Few corporate insurance plans cover disability. 
D)  It covers a portion of your salary if you are unable to work due to an accident or illness. 
E)  It covers your full salary if you are unable to work due to an accident or illness.

Question 3

Barry owns a car dealership. He bought ________ insurance that will reimburse him if he loses any of the dealership's cars in the event of fire, theft, or other calamities. This insurance will also cover lost income.

Accepted Answer

A)  calamity 
B)  liability 
C)  property casualty 
D)  business interruption 
E)  automobile 
A)  calamity 
B)  liability 
C)  property casualty 
D)  business interruption 
E)  automobile

Question 4

Taking more risk means potential for

Accepted Answer

A)  higher returns and no losses. 
B)  lower returns and higher losses. 
C)  higher returns and losses. 
D)  lower returns and losses. 
E)  higher returns and lower losses. 
A)  higher returns and no losses. 
B)  lower returns and higher losses. 
C)  higher returns and losses. 
D)  lower returns and losses. 
E)  higher returns and lower losses.

Question 5

One of the most common types of insurance policies is disability insurance.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following best describes currency risk?

Accepted Answer

A)  Currency risk occurs when companies are highly indebted to other firms. 
B)  Currency risk can be measured by the standard deviation of operating earnings. 
C)  Currency risk occurs because consumer tastes are always changing, and businesses must keep their offerings current. 
D)  Currency risk is associated with investing in firms operating in foreign countries. 
E)  Currency risk is always present for corporations with multinational operations. 
A)  Currency risk occurs when companies are highly indebted to other firms. 
B)  Currency risk can be measured by the standard deviation of operating earnings. 
C)  Currency risk occurs because consumer tastes are always changing, and businesses must keep their offerings current. 
D)  Currency risk is associated with investing in firms operating in foreign countries. 
E)  Currency risk is always present for corporations with multinational operations.

Question 7

All of the following are true of Medicare EXCEPT

Accepted Answer

A)  a person is eligible once he or she retires and receives Social Security benefits. 
B)  Medicare Part A covers doctor's fees. 
C)  Medicare Part D provides drug coverage. 
D)  Medicare is not free. 
E)  with Medicare, the more income you make, the more you pay for insurance. 
A)  a person is eligible once he or she retires and receives Social Security benefits. 
B)  Medicare Part A covers doctor's fees. 
C)  Medicare Part D provides drug coverage. 
D)  Medicare is not free. 
E)  with Medicare, the more income you make, the more you pay for insurance.

Question 8

Phil has a life insurance policy that provides a death benefit based on his age, health, and life expectancy. His policy is the simplest form of insurance and is called ________ life insurance.

Accepted Answer

A)  term 
B)  mortality 
C)  whole 
D)  permanent 
E)  variable 
A)  term 
B)  mortality 
C)  whole 
D)  permanent 
E)  variable

Question 9

Molly invests in stocks and bonds, which have the possibility of a gain or a loss. What can be used to cover her possible losses from fluctuating prices?

Accepted Answer

A)  a financial derivative 
B)  an insurance policy 
C)  a government promise 
D)  a speculative contract 
E)  an insurance option 
A)  a financial derivative 
B)  an insurance policy 
C)  a government promise 
D)  a speculative contract 
E)  an insurance option

Question 10

All of the following are types of insurance corporations must have EXCEPT

Accepted Answer

A)  health and disability insurance for their employees. 
B)  life insurance for key executives. 
C)  property casualty and liability insurance for injuries to employees and others. 
D)  automobile insurance to ensure that their employees get to work safely. 
E)  directors and officers liability insurance to protect the board of directors from lawsuits. 
A)  health and disability insurance for their employees. 
B)  life insurance for key executives. 
C)  property casualty and liability insurance for injuries to employees and others. 
D)  automobile insurance to ensure that their employees get to work safely. 
E)  directors and officers liability insurance to protect the board of directors from lawsuits.

Question 11

It would be safe to say that anyone who ________ experiences various business, operating, financial, currency, interest rate, political, market, and liquidity risks.

Accepted Answer

A)  owns property 
B)  works for a company 
C)  owns a business 
D)  manages a portfolio of stocks, bonds, or commodities 
E)  has money 
A)  owns property 
B)  works for a company 
C)  owns a business 
D)  manages a portfolio of stocks, bonds, or commodities 
E)  has money

Question 12

________ is the division of an insurance policy among many different insurance companies.

Accepted Answer

A)  Coinsurance 
B)  Reinsurance 
C)  Multi-insurance 
D)  Insurance partnership 
E)  Insurance collaboration 
A)  Coinsurance 
B)  Reinsurance 
C)  Multi-insurance 
D)  Insurance partnership 
E)  Insurance collaboration

Question 13

Risk is something we only face occasionally in our lives.

Accepted Answer

A) True 
 B)False

Question 14

What is true regarding how prices of financial securities and commodities tend to behave over the long term?

Accepted Answer

A)  Prices tend to fluctuate, creating market risk. 
B)  Prices tend to fall consistently over time. 
C)  Prices tend to rise consistently over time. 
D)  Prices tend to be highly volatile, demonstrating why markets can be risky. 
E)  Prices tend to follow supply and demand and trends related to gross domestic product growth rates and corporate earnings. 
A)  Prices tend to fluctuate, creating market risk. 
B)  Prices tend to fall consistently over time. 
C)  Prices tend to rise consistently over time. 
D)  Prices tend to be highly volatile, demonstrating why markets can be risky. 
E)  Prices tend to follow supply and demand and trends related to gross domestic product growth rates and corporate earnings.

Question 15

Stephanie owns a house with an acre of land. When her job relocates her to another state, she must sell her house quickly to get the cash she needs to move and buy a new house. The ability to turn her current house and land into cash quickly is called ________ risk.

Accepted Answer

A)  currency 
B)  liquidity 
C)  financial 
D)  market 
E)  interest rate 
A)  currency 
B)  liquidity 
C)  financial 
D)  market 
E)  interest rate

Question 16

All of the following are examples of risks EXCEPT when

Accepted Answer

A)  terrorists bomb major cities. 
B)  a person gets stuck in traffic on the way to work. 
C)  a person's gas stove starts leaking gas into the house. 
D)  an identity thief steals a person's credit card information and uses it to buy big ticket items. 
E)  flooding occurs that totals a vehicle. 
A)  terrorists bomb major cities. 
B)  a person gets stuck in traffic on the way to work. 
C)  a person's gas stove starts leaking gas into the house. 
D)  an identity thief steals a person's credit card information and uses it to buy big ticket items. 
E)  flooding occurs that totals a vehicle.

Question 17

Investors of all kinds can resort to financial engineering to minimize risk. All of the following are sophisticated investors who use financial engineering EXCEPT

Accepted Answer

A)  hedge funds. 
B)  insurance companies. 
C)  commercial banks. 
D)  investment banks. 
E)  individuals. 
A)  hedge funds. 
B)  insurance companies. 
C)  commercial banks. 
D)  investment banks. 
E)  individuals.

Question 18

All of these scenarios are examples of annuities EXCEPT

Accepted Answer

A)  Chris only has to pay credit card bills when he buys items with his card. 
B)  Mallory pays $500 in rent every month. 
C)  Steve pays monthly installments of $50 per month for the holiday presents he bought on layaway. 
D)  Crystal pays a heating and air conditioning specialist $150 twice per year to prepare her temperature control system prior to Summer and Winter. 
E)  Kate pays $1,500 per month for her mortgage. 
A)  Chris only has to pay credit card bills when he buys items with his card. 
B)  Mallory pays $500 in rent every month. 
C)  Steve pays monthly installments of $50 per month for the holiday presents he bought on layaway. 
D)  Crystal pays a heating and air conditioning specialist $150 twice per year to prepare her temperature control system prior to Summer and Winter. 
E)  Kate pays $1,500 per month for her mortgage.

Question 19

An annuity is

Accepted Answer

A)  always an annual payment. 
B)  a guaranteed equal payment for a given number of periods. 
C)  always a monthly payment. 
D)  a payment that does not have to be equally spaced. 
E)  a payment that can be made anytime after you receive the bill. 
A)  always an annual payment. 
B)  a guaranteed equal payment for a given number of periods. 
C)  always a monthly payment. 
D)  a payment that does not have to be equally spaced. 
E)  a payment that can be made anytime after you receive the bill.

Question 20

A whole life insurance policy is

Accepted Answer

A)  a policy that covers you for your entire life. 
B)  a policy that covers all your insurance needs, including automobile, home, and life. 
C)  a policy that costs less than a term life policy. 
D)  a term life policy with a savings account. 
E)  a policy that makes you wait until you die to get financial rewards for your loved ones. 
A)  a policy that covers you for your entire life. 
B)  a policy that covers all your insurance needs, including automobile, home, and life. 
C)  a policy that costs less than a term life policy. 
D)  a term life policy with a savings account. 
E)  a policy that makes you wait until you die to get financial rewards for your loved ones.

Which statement is true regarding the reserves kept by insurance companies?

What is true regarding disability insurance?

Barry owns a car dealership. He bought ________ insurance that will reimburse him if he loses any of the dealership's cars in the event of fire, theft, or other calamities. This insurance will also cover lost income.

Taking more risk means potential for

One of the most common types of insurance policies is disability insurance.

Which of the following best describes currency risk?

All of the following are true of Medicare EXCEPT

Phil has a life insurance policy that provides a death benefit based on his age, health, and life expectancy. His policy is the simplest form of insurance and is called ________ life insurance.

Molly invests in stocks and bonds, which have the possibility of a gain or a loss. What can be used to cover her possible losses from fluctuating prices?

All of the following are types of insurance corporations must have EXCEPT

It would be safe to say that anyone who ________ experiences various business, operating, financial, currency, interest rate, political, market, and liquidity risks.

________ is the division of an insurance policy among many different insurance companies.

Risk is something we only face occasionally in our lives.

What is true regarding how prices of financial securities and commodities tend to behave over the long term?

Stephanie owns a house with an acre of land. When her job relocates her to another state, she must sell her house quickly to get the cash she needs to move and buy a new house. The ability to turn her current house and land into cash quickly is called ________ risk.

All of the following are examples of risks EXCEPT when

Investors of all kinds can resort to financial engineering to minimize risk. All of the following are sophisticated investors who use financial engineering EXCEPT

All of these scenarios are examples of annuities EXCEPT

An annuity is

A whole life insurance policy is

The Dynamics of Business and Economics

Business Ethics and Social Responsibility

Business in a Borderless World

Options for Organizing Business

Small Business, Entrepreneurship, and Franchising

The Nature of Management

Organization, Teamwork, and Communication

Managing Operations and Supply Chains

Motivating the Workforce

Managing Human Resources

Customer-Driven Marketing

Dimensions of Marketing Strategy

Digital Marketing and Social Networking

Accounting and Financial Statements

Money and the Financial System

Financial Management and Securities Markets

Personal Financial Planning and Legal and Regulatory Environment

Appendix A: Guidelines for the Development of the Business Plan

Appendix B: Personal Career Plan

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Exam 20: Appendix C: Risk: The Basics of Risk Management

Which statement is true regarding the reserves kept by insurance companies?

What is true regarding disability insurance?

Barry owns a car dealership. He bought ________ insurance that will reimburse him if he loses any of the dealership's cars in the event of fire, theft, or other calamities. This insurance will also cover lost income.

Taking more risk means potential for

One of the most common types of insurance policies is disability insurance.

Which of the following best describes currency risk?

All of the following are true of Medicare EXCEPT

Phil has a life insurance policy that provides a death benefit based on his age, health, and life expectancy. His policy is the simplest form of insurance and is called ________ life insurance.

Molly invests in stocks and bonds, which have the possibility of a gain or a loss. What can be used to cover her possible losses from fluctuating prices?

All of the following are types of insurance corporations must have EXCEPT

It would be safe to say that anyone who ________ experiences various business, operating, financial, currency, interest rate, political, market, and liquidity risks.

________ is the division of an insurance policy among many different insurance companies.

Risk is something we only face occasionally in our lives.

What is true regarding how prices of financial securities and commodities tend to behave over the long term?

Stephanie owns a house with an acre of land. When her job relocates her to another state, she must sell her house quickly to get the cash she needs to move and buy a new house. The ability to turn her current house and land into cash quickly is called ________ risk.

All of the following are examples of risks EXCEPT when

Investors of all kinds can resort to financial engineering to minimize risk. All of the following are sophisticated investors who use financial engineering EXCEPT

All of these scenarios are examples of annuities EXCEPT

An annuity is

A whole life insurance policy is

The Dynamics of Business and Economics

Business Ethics and Social Responsibility

Business in a Borderless World

Options for Organizing Business

Small Business, Entrepreneurship, and Franchising

The Nature of Management

Organization, Teamwork, and Communication

Managing Operations and Supply Chains

Motivating the Workforce

Managing Human Resources

Customer-Driven Marketing

Dimensions of Marketing Strategy

Digital Marketing and Social Networking

Accounting and Financial Statements

Money and the Financial System

Financial Management and Securities Markets

Personal Financial Planning and Legal and Regulatory Environment

Appendix A: Guidelines for the Development of the Business Plan

Appendix B: Personal Career Plan

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