FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 24: Extension: Managing Risk

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

In designing an addition to his successful nursing home, Steve realized that water sprinklers and smoke detectors were now required by state regulations. His existing structure already had sprinklers and detectors because he felt that this was an effective strategy to:

A) self-insure against the risk of fire loss.
B) minimize the speculative risk of a fire.
C) reduce the risk of a fire loss.
D) avoid the risk of a fire loss.

E) All of the above
F) B) and D)

Correct Answer

verified

Show Answer

Question 42

True/False

Review LaterAdd Note

Review Later

Procter & Gamble Inc. is ready to launch a new shampoo in the marketplace. They will incur a speculative risk.

A) True
B) False

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

Risk management is getting much simpler thanks to the Internet.

Health savings accounts are managed care plans that have a high deductible.

Worldwide risks need to be prioritized so that international funds can be spent where they can do the most good.

Workers' compensation insurance guarantees payment of wages, medical care, and rehabilitation services for employees who are injured on the job.

One advantage of health savings accounts is that healthy people can use tax-deferred money to save for their future medical needs.

Harmon works on a highway construction crew and frequently handles explosives. His friend Willie works as a bookkeeper for a retail store. The amount of workers' compensation premiums paid by Harmon's employer will probably exceed the premiums paid by Willie's employer.

Liability losses result from property damage or injuries suffered by others for which the policyholder is held responsible.

The National Highway Traffic Safety Administration (NHTSA) provides consumers with recall notices for all makes and models of cars, trucks, motorcycles, and even school buses. In terms of risk management, the purpose of the NHTSA service is:

________ insurance replaces part of your income if you become unable to work for an extended period of time.

Typically, the only option that firms have to deal with pure risk is to buy insurance.

________ risk involves a chance of either profit or loss.

Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.

Property insurance covers losses from fires, accidents, or theft.

Southern Deliveries has decided to manage risk by requiring drivers to wear seat belts, have a commercial driver's license, monitor any moving violations each driver obtains, and to be sure that this information is kept in the employee records. Furthermore Southern has decided to carry an insurance policy with a very large deductible, preferring to pay for small damages to its trucks out-of-pocket. Southern has built enterprise risk management into their organization.

Self-insurance makes more sense for firms that operate one large facility than it does for firms with facilities scattered all over the country.

Going bare is a much less risky strategy for self-insurance.

There are two different kinds of risk: passive and active.

Firms can take out term life-insurance policies on their top executives.