Business Management And Law: Risk Management Test Quiz

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1/47 Questions

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

About This Quiz

This quiz evaluates understanding of risk management in business settings, focusing on inevitability of risks, strategies to mitigate them, the role of insurance, and legal aspects of business operations. It's ideal for learners aiming to enhance their risk management skills.

Business Management And Law: Risk Management Test Quiz - Quiz

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2.

A company can reduce international business risk by offering a wide range of products.
- True
- False
Correct Answer

A. True

Explanation

Offering a wide range of products can help a company reduce international business risk because it allows them to diversify their revenue streams and decrease dependence on a single product or market. By having a diverse product portfolio, the company can mitigate the impact of economic fluctuations, changes in consumer preferences, and political or regulatory risks in different countries. Additionally, offering a wide range of products can help the company cater to the specific needs and preferences of different markets, increasing their competitiveness and reducing the risk of market saturation.

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3.

Piracy is the illegal copying of software packages or information.
- True
- False
Correct Answer

A. True

Explanation

Piracy refers to the act of illegally copying software packages or information. This involves unauthorized reproduction, distribution, or use of copyrighted material without the permission of the owner. Therefore, the statement "Piracy is the illegal copying of software packages or information" is true.

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4.

Insurance exchanges the uncertainty of a possible large financial loss for a certain smaller payment.
- True
- False
Correct Answer

A. True

Explanation

Insurance is a risk management tool that helps individuals or organizations protect themselves against potential financial losses. By paying a smaller premium, individuals transfer the risk of a possible large financial loss to the insurance company. In return, the insurance company agrees to provide compensation or coverage in the event of a covered loss. This arrangement allows individuals to have peace of mind and financial security, knowing that they are protected from unexpected expenses. Therefore, the statement that insurance exchanges the uncertainty of a possible large financial loss for a certain smaller payment is true.

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5.

Companies should always insure against all risks, no matter how unlikely they are.
- True
- False
Correct Answer

A. False

Explanation

Insuring against all risks, no matter how unlikely they are, is not a practical approach for companies. It would result in excessive insurance costs and could potentially bankrupt the company. Instead, companies should assess the likelihood and potential impact of each risk and prioritize their insurance coverage accordingly. This allows them to manage risks effectively while maintaining financial stability. Therefore, the statement that companies should always insure against all risks, no matter how unlikely they are, is false.

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6.

Insurance companies also function as investment companies.
- True
- False
Correct Answer

A. True

Explanation

Insurance companies often invest the premiums they receive from policyholders in various financial instruments such as stocks, bonds, and real estate. These investments generate returns that help insurance companies cover the costs of claims and other expenses. In this way, insurance companies function as investment companies, using the funds they collect to generate additional income and grow their assets. Therefore, the statement is true.

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7.

Not all insurance agents work for an insurance company.
- True
- False
Correct Answer

A. True

Explanation

Some insurance agents work as independent agents and are not directly employed by any specific insurance company. These agents have the flexibility to sell insurance policies from multiple insurance companies and provide unbiased advice to their clients. Therefore, it is true that not all insurance agents work for an insurance company.

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8.

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.
- True
- False
Correct Answer

A. False

Explanation

Commercial property insurance does provide compensation for ongoing business expenses in the event of a temporary shutdown due to a fire, flood, or other major problem. Therefore, the correct answer is True.

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9.

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

A. False

Explanation

The statement is false because while insurance protection is important for a company, it is not the sole determinant of its survival. There are various factors that can affect a company's ability to stay in business, such as market conditions, competition, financial management, and strategic decision-making. While insurance can provide financial protection in case of unforeseen events, a company can still find alternative ways to manage risks and continue operating even if it cannot afford insurance.

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10.

Counterfeiting refers to the illegal use of intellectual property, whether it is in the form of a patent, trademark, or copyright.
- True
- False
Correct Answer

A. True

Explanation

Counterfeiting is indeed the illegal use of intellectual property, such as patents, trademarks, or copyrights. This means that someone is using these protected rights without proper authorization, which is against the law.

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11.

Business interruption insurance
- Covers property losses resulting from fire, storms, and theft
- Provides compensation for ongoing business expenses that occur if a business has a temporary shutdown due to a fire, flood or other major problem.
- Provides payments to employees who can not work due to illness or injury
- Protects against losses from injury to people or property resulting from a company's products, services or actions.
Correct Answer

A. Provides compensation for ongoing business expenses that occur if a business has a temporary shutdown due to a fire, flood or other major problem.

Explanation

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. This means that if a business is unable to operate due to a covered event, such as a fire or flood, the insurance policy will reimburse the business for its ongoing expenses, such as rent, utilities, and employee salaries. This coverage helps businesses recover financially during the period of interruption and ensures that they can continue to meet their financial obligations even when they are unable to generate income.

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12.

A risk that relates to harm or injury to other people or their property because of your actions is called
- Personal risk
- Property risk
- Liability risk
- Speculative risk
Correct Answer

A. Liability risk

Explanation

Liability risk refers to the potential for causing harm or damage to others or their property due to one's actions. It involves the legal responsibility and obligation to compensate for any losses or injuries caused. This type of risk is often associated with activities such as driving a vehicle, operating a business, or providing professional services. In such cases, individuals or organizations may be held liable for any harm caused, and may be required to pay for medical expenses, property damage, or legal fees.

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13.

The person or company buying an insurance policy.
- Policyholder
- Agent
- Beneficiary
- Insured
Correct Answer

A. Policyholder

Explanation

The term "policyholder" refers to the person or company that purchases an insurance policy. They are the ones who enter into a contractual agreement with the insurance company, paying premiums in exchange for coverage. The policyholder holds the rights and responsibilities associated with the policy, such as making premium payments and filing claims.

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14.

A policyholder's request for payment for a loss covered by an insurance policy is a
- Claim.
- Premium.
- Deductible.
- Fraud.
Correct Answer

A. Claim.

Explanation

When a policyholder experiences a loss that is covered by their insurance policy, they submit a request for payment to the insurance company. This request is known as a claim. It is the formal process of notifying the insurance company about the loss and seeking compensation for the damages or expenses incurred. The insurance company then evaluates the claim and determines whether it meets the criteria for coverage outlined in the policy. If approved, the insurance company will provide the policyholder with the agreed-upon payment for the loss.

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15.

A risk that can result in damage to your own health or well-being is called
- Personal risk.
- Property risk.
- Pure risk.
- Liability risk.
Correct Answer

A. Personal risk.

Explanation

Personal risk refers to the potential harm or danger that an individual may face, which can directly affect their own health or well-being. This can include risks such as accidents, illnesses, or injuries that can cause physical or emotional harm to the person involved. Property risk, on the other hand, refers to the potential damage or loss of one's property or belongings. Pure risk is a type of risk where there is only a possibility of loss or no loss at all, such as natural disasters. Liability risk involves the potential for legal responsibility or financial loss due to one's actions or negligence.

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16.

The person or company for which the insurer assumes the risk is the
- Insured.
- Beneficiary.
- Policyholder.
- Agent.
Correct Answer

A. Insured.

Explanation

The correct answer is "insured." In insurance, the insured refers to the person or company that purchases an insurance policy and is protected against financial losses. The insured pays premiums to the insurer in exchange for coverage and assumes the risk of potential losses. The insurer, in turn, agrees to compensate the insured for covered losses as specified in the insurance policy. The insured is the party for whom the insurer assumes the risk and provides protection.

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17.

A risk that presents the chance for loss but no opportunity for gain is a
- Speculative risk.
- Pure risk.
- Non-economic risk.
- Liability risk.
Correct Answer

A. Pure risk.

Explanation

A pure risk refers to a situation where there is only a chance for loss and no opportunity for gain. In this type of risk, there is no potential for profit or benefit, only the possibility of experiencing a negative outcome. This is different from speculative risks, which involve both the potential for gain and loss. Non-economic risks refer to risks that do not involve financial loss, while liability risks pertain to the potential for legal responsibility or obligation.

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18.

The exclusive right to possess, use and dispose of property and its profits.
- Property rights
- Patent rights
- Copyright
- Civil rights
Correct Answer

A. Property rights

Explanation

Property rights refer to the legal rights and privileges that individuals or entities have over a specific property. These rights include the exclusive right to possess, use, and dispose of the property, as well as the ability to enjoy its profits. Property rights are essential for promoting economic growth and individual freedom, as they provide incentives for individuals to invest in and improve their property. They also allow for the transfer of property through voluntary transactions, which helps facilitate trade and economic development.

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19.

A risk that can lead to loss of items such as money, vehicles and buildings.
- Property risk
- Personal risk
- Liability risk
- Speculative risk
Correct Answer

A. Property risk

Explanation

Property risk refers to the potential danger or threat that can result in the loss or damage of items such as money, vehicles, and buildings. This risk can arise from various factors such as natural disasters, theft, accidents, or fire. It is important for individuals and businesses to manage and mitigate property risks through measures like insurance, security systems, and preventive maintenance to minimize potential losses.

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20.

The amount a policyholder pays for insurance coverage.
- Premium
- Claim
- Benefits
- Liability
Correct Answer

A. Premium

Explanation

The term "premium" refers to the amount of money that a policyholder pays in order to obtain insurance coverage. It is the cost of the insurance policy and is typically paid on a regular basis, such as monthly or annually. The premium amount is determined by various factors, including the type of insurance, the coverage amount, the policyholder's risk profile, and the insurance company's pricing structure.

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21.

A risk that offers a chance to either gain or lose.
- Speculative risk
- Pure risk
- Personal risk
- Controllable risk
Correct Answer

A. Speculative risk

Explanation

A speculative risk refers to a situation where there is a possibility of both gaining or losing. It involves taking a chance on an uncertain outcome in the hopes of achieving a financial gain. This type of risk is commonly associated with investments in the stock market or other speculative ventures where the potential for profit exists, but there is also a significant possibility of loss. Unlike pure risk, which only involves the possibility of loss, speculative risk offers the potential for both gain and loss. Personal risk and controllable risk do not encompass the concept of both gain and loss, making speculative risk the correct answer.

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22.

Personal, liability and property risks are all examples of
- Uninsurable risks
- Economic risks
- Speculative risks
- Non-economic risks
Correct Answer

A. Economic risks

Explanation

Personal, liability, and property risks are all examples of economic risks because they involve potential financial loss or damage. Personal risks refer to risks that individuals face, such as illness or injury, which can result in medical expenses or loss of income. Liability risks involve the potential for legal claims or lawsuits, which can lead to financial liability. Property risks involve the potential for damage or loss to physical assets, such as homes or vehicles, which can result in financial costs for repairs or replacement. These risks are considered economic because they directly impact an individual's or organization's financial well-being.

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23.

Shrinkage is
- Loss of inventory due to shoplifting, employee theft, or other sources.
- Loss of profits due to a poor business climate.
- Loss of employees to other companies which offer better pay and benefits.
- Loss of ownership share due to stock sales.
Correct Answer

A. Loss of inventory due to shoplifting, employee theft, or other sources.

Explanation

Shrinkage refers to the loss of inventory in a business, which can occur due to various reasons such as shoplifting, employee theft, or any other sources. This answer accurately describes shrinkage by mentioning the loss of inventory caused by shoplifting, employee theft, or other sources. It correctly identifies the factors that contribute to shrinkage in a business, distinguishing it from the other options that are unrelated to inventory loss.

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24.

The actual loss for a business from theft is
- The price the business paid for the product.
- The retail price of the product.
- The profit that would have been made on the product.
- The amount the insurance company will pay for the item.
Correct Answer

A. The price the business paid for the product.

Explanation

The correct answer is "the price the business paid for the product." This means that the actual loss for a business from theft is the cost that the business originally paid to acquire the stolen item. This does not include the retail price, the potential profit, or the amount that the insurance company may reimburse. The business is directly impacted by the loss of the initial investment made to purchase the product.

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25.

Which of these actions encourages employee theft?
- Ensuring employees are satisfied with their jobs
- Allow employees to process transactions between themselves and the company
- Prohibit employees from making copies of any business-related keys
- Empty cash registers on a regular basis, or whenever they have more than a set level of cash
Correct Answer

A. Allow employees to process transactions between themselves and the company

Explanation

Allowing employees to process transactions between themselves and the company can encourage employee theft. This action creates an opportunity for employees to manipulate transactions for personal gain, such as pocketing cash or misusing company resources. By giving employees control over transactions, there is a higher risk of fraudulent activities and theft occurring within the organization.

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26.

What is the most important action a business can take to reduce employee theft?
- Use careful hiring procedures
- Place security cameras in storage areas
- Set up a bounty system to reward employees for reporting their coworkers
- Immediately fire and prosecute those found to be stealing
Correct Answer

A. Use careful hiring procedures

Explanation

Using careful hiring procedures is the most important action a business can take to reduce employee theft. By thoroughly screening potential employees, conducting background checks, and verifying references, businesses can identify individuals with a history of theft or dishonesty. This helps to ensure that only trustworthy individuals are hired, reducing the likelihood of internal theft.

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27.

The main source of loss in American businesses is
- Employee theft.
- Shoplifting.
- Poor inventory management.
- Insurance fraud.
Correct Answer

A. Employee theft.

Explanation

Employee theft is the main source of loss in American businesses because it refers to the act of employees stealing or embezzling company resources, such as money, products, or sensitive information. This can significantly impact a company's profitability and overall financial health. While shoplifting, poor inventory management, and insurance fraud can also cause losses, employee theft is often more prevalent and damaging as it involves individuals within the organization who have access to valuable assets.

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28.

Which of these tends to reduce losses from bad checks?
- Require that the customer's name, address and phone number are pre-printed on the check
- Accepting checks with a check number lower than 300
- Giving cash back for checks written in an amount above the purchase price
- Accepting checks that are from out-of-state banks
Correct Answer

A. Require that the customer's name, address and phone number are pre-printed on the check

Explanation

Requiring that the customer's name, address, and phone number are pre-printed on the check tends to reduce losses from bad checks because it provides a way to contact the customer if there are any issues with the check. This information can be used to verify the customer's identity and ensure that the check is legitimate. It also acts as a deterrent for potential fraudsters, as they are less likely to provide accurate personal information on a fraudulent check. Overall, this requirement increases the chances of recovering funds or resolving any problems associated with bad checks.

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29.

Which of these is an effective method of preventing or reducing loss due to burglary and robbery?
- Keeping records of key distribution
- Ensuring each lock is fitted properly for the door
- Keeping a minimum amount of cash on hand by making frequent bank deposits
- Storing more expensive items in harder-to-reach places
- Focus strictly on conducting business, regardless of your surroundings
- Prohibiting employees from copying work keys
- Keeping the same door locks regardless of employee turnover
Correct Answer(s)

A. Keeping records of key distribution
A. Ensuring each lock is fitted properly for the door
A. Keeping a minimum amount of cash on hand by making frequent bank deposits
A. Storing more expensive items in harder-to-reach places
A. Prohibiting employees from copying work keys

Explanation

An effective method of preventing or reducing loss due to burglary and robbery is to keep records of key distribution. This helps to track who has access to the premises and can aid in identifying any potential security breaches. Ensuring that each lock is fitted properly for the door is also important as it can deter burglars and make it more difficult for them to gain entry. Keeping a minimum amount of cash on hand by making frequent bank deposits reduces the incentive for robberies. Storing more expensive items in harder-to-reach places makes it more challenging for burglars to steal them. Prohibiting employees from copying work keys further enhances security by limiting unauthorized access.

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30.

Which of these is NOT an effective method of preventing or reducing accidents?
- Planning for non-occurrence of accidents
- Properly training employees
- Safe building and facility design
- Trimming trees and bushes
Correct Answer

A. Planning for non-occurrence of accidents

Explanation

Planning for non-occurrence of accidents is not an effective method of preventing or reducing accidents because accidents can still occur even with thorough planning. While planning can help identify potential hazards and develop safety protocols, accidents can still happen due to unforeseen circumstances or human error. It is important to have additional measures such as properly training employees, safe building and facility design, and trimming trees and bushes to create a safe environment and reduce the likelihood of accidents.

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31.

Which of these types of insurance will pay expenses while a business has to shut down due to a flood or fire?
- Business interruption insurance
- Commercial property insurance
- Workers' compensation insurance
- Business disability insurance
Correct Answer

A. Business interruption insurance

Explanation

Business interruption insurance is the correct answer because it is specifically designed to cover the expenses and loss of income that a business may face when it is forced to shut down temporarily due to a flood or fire. This type of insurance provides coverage for ongoing expenses such as rent, utilities, and employee salaries, as well as any potential loss of revenue during the shutdown period. It helps businesses to recover and resume operations after a disaster by providing financial support during the interruption period.

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32.

A risk that you cannot reduce the probability of loss occurring or the amount of loss if it does occur is known as a( n) _________
- Pure risk.
- Uninsurable risk.
- Uncontrollable risk.
- Non-economic risk.
Correct Answer

A. Uncontrollable risk.

Explanation

An uncontrollable risk refers to a risk that cannot be mitigated or reduced in terms of the probability of loss occurring or the amount of loss if it does occur. This type of risk is beyond the control of individuals or organizations and cannot be managed through risk management strategies. It is characterized by its unpredictability and inability to be influenced or altered.

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33.

Which of these is NOT a common type of insurance on a business?
- Health insurance
- General liability insurance
- Professional liability insurance
- Business interruption insurance
Correct Answer

A. Health insurance

Explanation

Health insurance is not a common type of insurance on a business. While businesses may offer health insurance to their employees, it is not typically categorized as a type of insurance specifically for the business itself. The other options listed - general liability insurance, professional liability insurance, and business interruption insurance - are all common types of insurance that businesses typically carry to protect themselves from various risks and liabilities.

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34.

Which of these is NOT a common category of items covered by business insurance?
- Profits
- Personnel
- Business operations
- Property
Correct Answer

A. Profits

Explanation

Profits are not a common category of items covered by business insurance. Business insurance typically covers categories such as personnel, business operations, and property. Profits are considered a financial aspect of a business and are not typically insured against loss or damage. Instead, business insurance focuses on protecting tangible assets and liabilities associated with the business operations.

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35.

You decide to cancel your trip to the beach because a hurricane is forecast to hit the area. This is an example of
- Insuring risk
- Transferring risk
- Assuming risk
- Avoiding risk
Correct Answer

A. Avoiding risk

Explanation

The decision to cancel the trip to the beach due to the forecasted hurricane is an example of avoiding risk. By not going to the beach, the individual is actively taking steps to prevent any potential harm or damage that could be caused by the hurricane. This is a proactive approach to risk management, where the person chooses to eliminate or minimize their exposure to the risk altogether.

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36.

Finding someone else to complete a risky activity is known as _______.
- Insuring risk
- Transferring risk
- Assuming risk
- Avoiding risk
Correct Answer

A. Transferring risk

Explanation

Transferring risk refers to the act of finding someone else to complete a risky activity. This involves shifting the potential negative consequences or liabilities associated with the activity to another party. By transferring risk, individuals or organizations can mitigate their exposure to potential losses or damages and transfer the responsibility for managing and mitigating those risks to someone else.

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37.

The party that agrees to take on certain economic risks and to pay for losses if they occur is the
- Insurer.
- Policyholder.
- Assignee.
- Beneficiary.
Correct Answer

A. Insurer.

Explanation

The party that agrees to take on certain economic risks and pay for losses if they occur is the insurer. This is because an insurer is a company or individual that provides insurance coverage and assumes the financial responsibility for potential losses or damages that may happen to the policyholder or beneficiary. The insurer takes on these risks in exchange for the payment of premiums by the policyholder.

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38.

All of the following are types of insurance a business might purchase to protect its employees EXCEPT
- Health insurance.
- Disability insurance.
- Liability insurance.
- Life insurance.
Correct Answer

A. Liability insurance.

Explanation

A business might purchase health insurance to provide medical coverage for its employees, disability insurance to provide income protection in case of disability, and life insurance to provide financial support for the families of employees in case of their death. However, liability insurance is not meant to protect employees directly. It is designed to protect the business from legal claims and expenses in case of accidents, injuries, or damages caused by the business's operations or products. Therefore, liability insurance is not a type of insurance that a business would purchase to protect its employees.

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39.

This type of insurance covers a large number of employees and their family members under one policy.
- Group insurance
- Business interruption insurance
- Workers' compensation insurance
- Liability insurance
Correct Answer

A. Group insurance

Explanation

Group insurance is the correct answer because it is a type of insurance that provides coverage to a large number of employees and their family members under a single policy. This type of insurance is typically offered by employers as a benefit to their employees, and it helps to spread the risk among a group of individuals. Group insurance policies often include coverage for health, life, disability, and dental insurance, among others. By pooling the risk, group insurance can provide more affordable coverage compared to individual insurance policies.

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40.

Which of the following circumstances can lead to costly, uninsurable business risks?
- Technology changes
- Consumer demand
- Competitors' actions
- Changing laws or political climates
- Changing culture
- Mistreatment of employees
- Performing dangerous work, such as mining, construction, or demolition
Correct Answer(s)

A. Technology changes
A. Consumer demand
A. Competitors' actions
A. Changing laws or political climates
A. Changing culture

Explanation

Costly, uninsurable business risks can arise from various circumstances. Technology changes can lead to risks as businesses may need to invest heavily in new technology or face obsolescence. Consumer demand fluctuations can result in financial losses if businesses fail to adapt to changing preferences. Competitors' actions, such as aggressive pricing or product launches, can also impact profitability. Changing laws or political climates can introduce regulatory uncertainties and compliance costs. Similarly, changing culture can affect consumer behavior and business operations. Mistreatment of employees can result in legal liabilities and reputational damage. Lastly, performing dangerous work exposes businesses to potential accidents, injuries, and related costs.

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41.

Which of these does NOT help a business manage uninsurable risks?
- Study all of the risk areas
- Calm employees by telling them that all risks are insured (even if they're not).
- Practice careful hiring policies
- Be active in the local community
Correct Answer

A. Calm employees by telling them that all risks are insured (even if they're not).

Explanation

Calm employees by telling them that all risks are insured (even if they're not) does not help a business manage uninsurable risks because it creates a false sense of security. It is important for a business to be transparent and honest with its employees about the risks that cannot be insured, so that they can take appropriate measures to mitigate those risks.

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42.

What is the limit for claims in small claims court in Florida?
- $5,000
- $75,000
- $15,000
- $500
Correct Answer

A. $5,000

Explanation

In Florida, the limit for claims in small claims court is $5,000. This means that individuals can only file a claim for an amount up to $5,000 in small claims court. Claims exceeding this limit would need to be filed in a higher court.

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43.

Which of these is a legal way to reduce shoplifting?
- Security cameras in generally accessible areas
- Security cameras in dressing rooms
- Booby traps to injure or kill shoplifters
- Posting pictures of suspected shoplifters in public.
Correct Answer

A. Security cameras in generally accessible areas

Explanation

One legal way to reduce shoplifting is by installing security cameras in generally accessible areas. These cameras can act as a deterrent to potential shoplifters, as they are aware that their actions are being recorded and can be used as evidence against them. Additionally, the presence of cameras can help store employees monitor the sales floor and identify any suspicious behavior. By having cameras in generally accessible areas, the store can maintain a level of surveillance that helps deter and catch shoplifters without violating any legal rights or resorting to harmful measures.

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44.

By opening a business to the public, an enterpreneur owes a duty of care to
- All of these.
- His employees.
- His customers.
- People who come and browse, but have no plans to buy.
- Vendors.
Correct Answer

A. All of these.

Explanation

When an entrepreneur opens a business to the public, they are responsible for ensuring the safety and well-being of everyone involved. This includes their employees, customers, people who come to browse without buying, and vendors. The duty of care means that the entrepreneur must take reasonable measures to prevent harm or injury to these individuals while they are on the premises. This includes maintaining a safe environment, providing proper training and supervision for employees, and addressing any potential hazards or risks that may arise.

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45.

The Consumer Product Safety Commission seeks to protect people from
- Unreasonable risks of injury or death associated with the use of consumer products.
- Increasing consumer prices.
- Decreasing value of products.
- All risks of injury or death.
Correct Answer

A. Unreasonable risks of injury or death associated with the use of consumer products.

Explanation

The correct answer is unreasonable risks of injury or death associated with the use of consumer products. This answer aligns with the stated purpose of the Consumer Product Safety Commission, which is to protect people from such risks. The other options, such as increasing consumer prices or decreasing value of products, are not mentioned or implied in the given statement. Additionally, the statement does not suggest that the commission aims to protect against all risks of injury or death, but rather specifically focuses on unreasonable risks associated with consumer products.

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46.

Business laws and regulations tend to
- Be written in response to a recent occurrence.
- Be written in anticipation of a future occurrence.
- Not be related to real-world events.
- Be written with the best interests of business in mind.
Correct Answer

A. Be written in response to a recent occurrence.

Explanation

Business laws and regulations are typically formulated as a response to a recent occurrence. This means that when a significant event or issue arises in the business world, lawmakers and regulators analyze the situation and create laws and regulations to address and prevent similar incidents in the future. By doing so, they aim to protect businesses, consumers, and the overall economy from potential risks and ensure a fair and transparent business environment. This approach ensures that laws and regulations are relevant and up-to-date, adapting to the evolving needs and challenges of the business world.

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47.

Which of these is NOT required of a negotiable instrument?
- It must state a specific person to whom payment is to be made.
- It must be in writing and signed by the maker.
- It must contain an unconditional promise to pay.
- It must be payable on demand or at a certain time.
Correct Answer

A. It must state a specific person to whom payment is to be made.

Explanation

A negotiable instrument is a document that guarantees the payment of a specific amount of money. It must meet certain criteria to be considered negotiable. It must be in writing and signed by the maker, contain an unconditional promise to pay, and be payable on demand or at a certain time. However, it does not need to state a specific person to whom payment is to be made. This is because negotiable instruments can be transferred from one person to another, and the payment can be made to the bearer or holder of the instrument.

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Quiz Edited by
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Mar 17, 2013

Quiz Created by
MarkowitzS

Business Management And Law: Risk Management Test Quiz

No matter how carefully you plan, you cannot avoid all risk.

Quiz Preview

A company can reduce international business risk by offering a wide range of products.

Piracy is the illegal copying of software packages or information.

Insurance exchanges the uncertainty of a possible large financial loss for a certain smaller payment.

Companies should always insure against all risks, no matter how unlikely they are.

Insurance companies also function as investment companies.

Not all insurance agents work for an insurance company.

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.

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

Counterfeiting refers to the illegal use of intellectual property, whether it is in the form of a patent, trademark, or copyright.

Business interruption insurance

A risk that relates to harm or injury to other people or their property because of your actions is called

The person or company buying an insurance policy.

A policyholder's request for payment for a loss covered by an insurance policy is a

A risk that can result in damage to your own health or well-being is called

The person or company for which the insurer assumes the risk is the

A risk that presents the chance for loss but no opportunity for gain is a

The exclusive right to possess, use and dispose of property and its profits.

A risk that can lead to loss of items such as money, vehicles and buildings.

The amount a policyholder pays for insurance coverage.

A risk that offers a chance to either gain or lose.

Personal, liability and property risks are all examples of

Shrinkage is

The actual loss for a business from theft is

Which of these actions encourages employee theft?

What is the most important action a business can take to reduce employee theft?

The main source of loss in American businesses is

Which of these tends to reduce losses from bad checks?

Which of these is an effective method of preventing or reducing loss due to burglary and robbery?

Which of these is NOT an effective method of preventing or reducing accidents?

Which of these types of insurance will pay expenses while a business has to shut down due to a flood or fire?

A risk that you cannot reduce the probability of loss occurring or the amount of loss if it does occur is known as a( n) _________

Which of these is NOT a common type of insurance on a business?

Which of these is NOT a common category of items covered by business insurance?

You decide to cancel your trip to the beach because a hurricane is forecast to hit the area. This is an example of

Finding someone else to complete a risky activity is known as _______.

The party that agrees to take on certain economic risks and to pay for losses if they occur is the

All of the following are types of insurance a business might purchase to protect its employees EXCEPT

This type of insurance covers a large number of employees and their family members under one policy.

Which of the following circumstances can lead to costly, uninsurable business risks?

Which of these does NOT help a business manage uninsurable risks?

What is the limit for claims in small claims court in Florida?

Which of these is a legal way to reduce shoplifting?

By opening a business to the public, an enterpreneur owes a duty of care to

The Consumer Product Safety Commission seeks to protect people from

Business laws and regulations tend to

Which of these is NOT required of a negotiable instrument?