WorksheetsChapter 14 Test - Principles of Business 1/4
Total questions: 58
Worksheet time: 29mins
Indicate whether the statement is true or false. 1. The person or company buying an insurance policy is called the insurer.
True
False
Indicate whether the statement is true or false. 2. When you invest money in the stock market, you are taking a pure risk.
True
False
Indicate whether the statement is true or false. 3. Businesses cannot insure many of the risks they face.
True
False
Indicate whether the statement is true or false. 4. With group insurance, a large number of employees and their family members are covered under one policy.
True
False
Indicate whether the statement is true or false. 5. If a business transfers a risk, that means that no one assumes the risk; it is simply eliminated.
True
False
Indicate whether the statement is true or false.
True
False
Indicate whether the statement is true or false. 7. If a risk is not common or if it is impossible to predict the amount of loss that could be suffered, it is termed an uninsurable risk.
True
False
Indicate whether the statement is true or false.
True
False
Indicate whether the statement is true or false. 9. Vehicle insurance pays medical costs for those injured if people driving the company’s vehicles cause an accident.
True
False
Indicate whether the statement is true or false. 10. It is usually a huge risk for a company to employ locals when it expands into the international marketplace.
True
False
The three major categories of business insurance are
a. personnel, property, and economic conditions.
b. customers, employees, and vendors.
c. personnel, property, and operations.
d. technology changes, consumer demand, and economic conditions.
To reduce international business risk, a business should
offer only a small number of products.
involve local business partners and employ local management.
carry out business in only a few countries.
all of the above are true.
If you choose not to complete a risky activity, you are said to be the risk.
transferring
respecting
assuming
Which of the following is NOT an example of intellectual property?
music
books
movies
stereos
Which of the following risks faced by businesses are often uninsurable?
economic conditions
consumer demand
competitors’ actions
all of the above
Independent insurance agents
can charge policyholders whatever they want for premiums.
work for a large insurance company and sell only policies written by that company.
usually sell many kinds of policies from a number of different companies.
work only for businesses, not individuals, and therefore have special expertise in business-related insurance needs.
A business can transfer the risk of product damage by
delivering a product itself.
using other channel members to store and distribute products.
simply deciding to do nothing because a problem is very unlikely to occur.
all of the above.
This type of insurance protects against losses from injury to people or property resulting from the products, services,
Liability insurance
Health insurance
Life insurance
Property insurance
Which of the following is a controllable risk?
a. a sudden hailstorm
b. loss from theft
c. a lightning strike
d. a flash flood
A system of insurance set up by state law that pays employees who are injured on the job is called
liability insurance.
group insurance.
retirement insurance.
workers’ compensation.
Business interruption insurance
provides compensation for ongoing business expenses that occur if a business has a temporary shutdown due to a fire, flood, or other major problem
covers property losses resulting from fire, storms, accidents, theft, and vandalism.
insures the lives of key executives because of their importance to the company’s success.
compensates business owners in the event of a bankruptcy or business failure.
The illegal use of intellectual property, patents, trademarks, and copyrights is known as
phishing.
hacking.
counterfeiting.
forging.
An insurance policy states the conditions to which
the insurance company and the policyholder have agreed.
the insurance company and the insurer have agreed.
the insurer and the insured have agreed.
the policyholder and the insurer have agreed.
The exclusive right of an inventor to make, sell, and use a product or process is called a
patent.
trademark.
copyright.
claim.
A risk that involves a possible injury to your health would be classified as a
liability insurance
health insurance
life insurance
all of the above
The person or business for which an insurance company assumes the risk is called the
insurer.
policyholder.
insured.
claimant.
Which of the following pays the amount of an insurance policy upon the death of the insured?
disability insurance
life insurance
health insurance
workers’ compensation
Which of the following would be a POOR way for a business to manage uninsurable risks?
Managers should be aware of changes in the economy and competitors’ actions.
Executives must not reveal to employees that certain aspects of business operations are not fully insured.
The business should take an active role in its local community.
The business should be very careful about who it hires.
The amount a policyholder must pay for insurance coverage is a
claim.
premium.
deductible.
ransom.
A pure risk
offers no opportunity for gain.
is uncontrollable.
is uninsurable.
all of the above are true.
31. The amount a policyholder pays for insurance coverage is called a(n) _______________.
premium
deductible
beneficiary
claim
32. A(n) _______________ is a policyholder’s request for payment for a loss that an insurance policy covers.
claim
premium
deductible
beneficiary
The person who represents an insurance company and sells policies to individuals and businesses is an insurance _______________.
agent
broker
adjuster
underwriter
34. A(n) _______________ risk relates to harm or injury to other people or to their property because of your actions.
liability
speculative
personal
investment
35. ____________________ property refers to technical knowledge or creative work.
Intellectual
Physical
Real Estate
Personal
36. ____________________ insurance provides payments to employees who are not able to work for an extended period due to serious illness or injury.
Disability
Life
Auto
Homeowners
37. Risk can be thought of as the possibility of incurring a(n) ____________________.
loss
profit
opportunity
benefit
38. ____________________ exchanges the uncertainty of a possible large financial loss for a certain smaller payment.
Insurance
Loan
Investment
Tax
39. Life insurance payments are made to people named in the policy known as ____________________.
beneficiaries
insurers
underwriters
policyholders
When you ____________________ a risk, you complete a risky activity with full responsibility.
assume
avoid
transfer
reduce
41. Businesses buy ____________________ property insurance to cover property losses from events such as floods, fire, and earthquakes.
special
general
basic
limited
42. A(n) ____________________ risk offers the chance either to gain or to lose.
speculative
pure
static
insurable
A risk that cannot be reduced by your actions is called a(n) ____________________ risk.
uncontrollable
avoidable
personal
transferable
44. ____________________ risks may result in inconvenience or embarrassment but do not have a financial impact.
Non-economic
Economic
Operational
Strategic
A premium is:
an amount paid for insurance coverage
a type of investment
a government tax
a loan repayment
A claim is:
an opinion or statement that can be argued or supported with evidence
a type of food
a mathematical equation
a historical event
An agent is:
A person who acts on behalf of another
A type of machine
A place where goods are stored
A form of currency
Liability is:
an asset owned by a business
a legal responsibility for something, especially a debt or financial obligation
a type of income earned by a company
a form of equity in a business
What does Intellectual refer to in the context of business?
Physical assets
Financial resources
Knowledge and ideas
Market share
Disability in the context of business refers to:
A physical or mental impairment that limits one or more major life activities.
A type of business insurance.
A government tax policy.
A marketing strategy.
What is loss in business?
When expenses exceed revenue
When revenue exceeds expenses
When assets increase
When liabilities decrease
Insurance is:
A form of investment
A way to protect against financial loss
A type of loan
A government tax
Beneficiaries are:
People who receive benefits
People who give benefits
People who manage benefits
People who create benefits
What does it mean to assume in business?
To make decisions without all the facts
To conduct thorough research
To always follow the rules
To avoid taking risks
What is commercial in business?
A type of advertisement
A business transaction
A legal document
A financial report
What is speculative in business?
A business activity involving risk and uncertainty for potential profit
A business activity with guaranteed returns
A business activity with no risk involved
A business activity that always results in loss
Uncontrollable in business refers to:
Factors that can be managed by the business
Factors outside the business's control
Internal company policies
Employee performance reviews
What is Noneconomic in business?
Activities not related to earning profit
Activities related to production
Activities related to marketing
Activities related to finance
