1. Chapter 14 Review

2. True/False
A company can reduce international business risk by offering a wide range of products
True

3. Fill in the blank
_________property refers to technical knowledge or creative work; it includes software, clothing designs, music, books, and movies.
Intellectual

4. MC Personal, liability, and property risks are all examples of
(a) uninsurable risks
(b) economic risks
(c) speculative risks
(d) non-economic risks B

5. True or False Not all insurance agents work for insurance companies

6. MC
To manage uninsurable risks, a business should do all of the following EXCEPT
(a) study all of the risk areas
(b) calm employees by telling them that all risks are insured
(c) practice careful hiring policies
(d) be active in the local community. C

7. True or False
Counterfeiting refers to the illegal use of intellectual property, patents, trademarks, and copyrights.
True

8. MC
You decide to cancel your trip to the Gulf Coast because a hurricane is forecast to hit the area. This is an example of
(a) insuring risk
(b) transferring risk
(c) assuming risk
(d) avoiding risk. D

9. True or False
Insurance companies also function as investment companies
True

10. MC
The party that agrees to take on certain economic risks and to pay for losses if they occur is the
(a) insurer
(b) policyholder
(c) assignee
(d) beneficiary. A

11. Fill in the blank
If you complete a risky activity with full responsibility and agree to deal with the result if you suffer a loss, you are said to be _____________a risk.
Assuming

12. True or False
If a company cannot afford the cost of insurance protection, it simply must go out of business.
False

13. MC
Which of the following circumstances can lead to costly, uninsurable business risks?
(a) technology changes
(b) consumer demand
(c) competitors’ actions
(d) all of the above D

14. True or False
Companies should always insure against all risks, no matter how unlikely they are.
False

15. Fill in the blank
The three major categories of business insurance are _____, _______and ___________________.
Personnel, property, business operations.

16. MC
A company that finds another business to complete a risky activity is (a) insuring risk
(b) transferring risk
(c) assuming risk
(d) avoiding risk. B

17. True or False
Commercial property 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.
False

18. MC
All of the following are types of insurance a business might purchase to protect its employees EXCEPT
(a) health insurance
(b) disability insurance
(c) liability insurance
(d) life insurance. C

19. Fill in the blank
A(n) ________insurance policy pays the amount of the policy upon the death of the insured; the payment is made to people named in the policy known as ___________.
Life, beneficiaries

20. True or False
Insurance exchanges the uncertainty of a possible large financial loss for a certain smaller payment.
True

21. MC A type of risk that cannot be reduced by your action is a(n)
(a) pure risk
(b) uninsurable risk
(c) incontrollable risk
(d) non-economic risk C

22. True or False
No matter how carefully you plan, you cannot avoid all risk.
True

23. MC
This type of insurance covers a large number of employees and their family members under one policy.
(a) group insurance
(b) business interruption insurance
(c) workers’ compensation insurance
(d) liability insurance A

24. Fill in the blank
A risk that you can reduce or eliminate by actions you take is a(n) __________________risk.
Controllable

25. MC
Examples include the McDonald’s golden arches and Kellogg’s Tony the Tiger.
(a) patents
(b) trademarks
(c) copyrights
(d) all of the above. B

26. Know definitions for policyholder property rights personal risk
pure risk
property risk
speculative risk
liability risk
insured
premium
claim