FP 2 Unit 1 Practice Quiz

An executive whose responsibilities include the planning, controlling, preventing, and limiting of business losses and enhancing possibilities for gain is known as a:

• CRO (chief risk officer)

• CFO (chief financial officer)

• CIO (chief insurance officer)

• COO (chief operations officer)

When Bob covers the windows of his deli with plywood to protect them from approaching hurricane winds, what is he trying to do with the risk?

• accept

• analyze

• mitigate

• transfer

Anna is an insurance agent who is working with Tracy, the sole proprietor of a small dental practice, to determine the type of liability insurance she needs. Anna suggests that Tracy needs to purchase insurance that will cover her legal expenses in the event a patient sues her for negligence. What type of liability insurance is Anna advising Tracy to purchase?

• workers' compensation

• commercial

• malpractice

• healthcare

Michelle has acquired proof that her coworker Ted has been embezzling money from the company. If Michelle fails to inform her employer about Ted's activities, what will likely occur?

• Ted will be charged with a felony.

• The company's financial risk will increase.

• The company's property insurance premium will increase.

• The government will fine the company for noncompliance.

The two dimensions of risk are:

• impact and avoidance.

• probability and impact.

• probability and avoidance.

• mitigation and acceptance.

A health food company claims that its products will cure many diseases, but without proof of this claim. When customers realized that the claim was unfounded, the company suffered from a damaged reputation and many lawsuits. The company's behavior is considered to be:

• favorable.

• moral.

• normal.

• unethical.

A good source of information about the retroactive risks of a business would be a/an:

• Environmental Scan

• Purchasing Manager

• Business Incident log

• Local weather forecast

Which is true about a captive agent relationship?

• A captive agent owns all clients that he/she services.

• The captive agent is guided by dual agency guidelines.

• The insurer owns and maintains control of all accounts serviced by the captive agent.

• A captive agent has the right to rewrite the insured if he/she terminates his/her relationship with the insurer.

The insurance industry generates the funds needed to pay the claims of policyholders by:

• obtaining loans from financial institutions.

• investing money from premiums.

• consolidating stock portfolios.

• selling related merchandise.

Which scenario would be an example of a business acting ethically in regards to insurance?

• obtaining the insurance required by law

• telling the whole truth to insurance agents

• keeping insurance information concealed from staff

• maintaining the same insurance policies for as long as possible