Financial Planning 2 Unit 1 Exam Review

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.

What can risk managers do to ensure the successful launch of a new product?

• act quickly to beat the competition

• evaluate potential gains and losses of the event

• develop fail-proof strategies for the calendar year

• ignore issues the company has encountered in the past

C’eri sent out an email to customers several days after her supervisor told her to send it. When her supervisor asked her about it, she said that she was unable to send it when he asked because the network WiFi was down. C’eri is putting her company at risk due to her:

• unsafety.

• dishonesty.

• lack of security.

• conflicts of interest.

Paulo is a terrible driver and has had many traffic tickets and accidents. What type of insurance will his insurance company have to get for Paulo?

• reinsurance

• excess insurance

• standard insurance

• exclusion insurance

A primary characteristic of a whole life insurance policy is that it:

• requires policyholders to pay low premiums annually.

• covers the insured for a time period of 25 years.

• covers only the insured's burial expenses.

• accumulates cash value over time.

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

A provision in an insurance policy that eliminates coverage for some types of risks is called a/an:

• adjustment.

• excess.

• exclusion.

• standard.

What category of risk typically has the most impact on the ability of a business to reach planned goals and objectives?

• financial

• hazard

• operational

• strategic

Which statement accurately describes the nature of prospective risks?

• They are typically more common than retroactive risks.

• They are usually easier to identify than retroactive risks.

• They have failed to happen before but could occur in the future.

• They have occurred in the past so they will fail to reoccur in the future.

One goal of risk management is to:

• limit losses.

• increase expenses.

• increase employee loyalty.

• determine right from wrong.