Question 1

If riot police officers are trained to handle violent soccer fans, this is an example of the ________ strategy for risk management.
risk avoidance
risk transfer
risk control
risk retention
risk shift

Accepted Answer

The answer of If riot police officers are trained to...

Question 2

Blake Corp. wants to transfer its risk to another organization. Which of the following methods would it most likely use?
Surety bonds
Fidelity bonds
Premiums
Contracts
Insurance

Accepted Answer

The answer of Blake Corp. wants to transfer its risk...

Question 3

A firm that buys an insurance policy to protect itself against automobile wrecks is practising
risk avoidance.
risk transfer.
risk acceptance.
risk control.
risk retention.

Accepted Answer

The answer of A firm that buys an insurance policy...

Question 4

Quick-X Corp. has recently sent its delivery drivers to a defensive driving course in order to reduce accidents with company vehicles. This is an example of
risk shift.
risk control.
risk transfer.
risk retention.
risk avoidance.

Accepted Answer

The answer of Quick-X Corp. has recently sent its delivery...

Question 5

The second step in a risk management program is to
measure frequency and severity of potential losses.
monitor results of the program.
evaluate alternatives.
implement the program.
identify risks and potential losses.

Accepted Answer

The answer of The second step in a risk management...

Question 6

The risk associated with the chance of a warehouse fire is a(n) ________ risk.
"act of God"
pure
speculative
financial
market

Accepted Answer

The answer of The risk associated with the chance of...

Question 7

Magnum Corp. has embarked on a risk-management process. They have just completed identifying risks and potential losses. What should they do next?
Choose techniques that best handle the loss
Implement the risk management program
Measure the frequency and severity of losses
Transfer the risk
Evaluate alternatives for handling risk

Accepted Answer

The answer of Magnum Corp. has embarked on a risk-management...

Question 8

Before a corporation sells securities, that corporation is required by law to offer future investors the opportunity to read through a document, which contains complete information on both the new issue and the corporation. What is that required document called?
Prospectus
Book report
Affidavit
Income statement
Order blank

Accepted Answer

The answer of Before a corporation sells securities, that corporation...

Question 9

Which one of the following risk management techniques does a firm practise when it chooses self-insurance instead of submitting claims to an insurance company?
Risk transfer
Risk avoidance
Risk retention
Risk control
Risk shift

Accepted Answer

The answer of Which one of the following risk management...

Question 10

The final step in a risk management program is to
measure frequency and severity of potential losses.
identify risks and potential losses.
monitor results of the program.
implement the program.
evaluate alternatives.

Accepted Answer

The answer of The final step in a risk management...

Question 11

Suppose that in June 2013 you bought a call option that allows you to buy 100 shares of a certain stock for $20 before October 2013. If the market price of the stock at some point before October 2013 is $23, and you exercise your option, what will happen?
You will make a $30.00 profit.
You will make a $300.00 profit.
You will make a $3000.00 profit.
You will incur a loss of $30.00.
You will incur a loss of $300.00.

Accepted Answer

The answer of Suppose that in June 2013 you bought...

Question 12

Parker Corp. has decided to pay employee medical costs out of company funds rather than buying insurance. This is an example of
risk control.
risk avoidance.
risk transfer.
risk shift.
risk retention.

Accepted Answer

The answer of Parker Corp. has decided to pay employee...

Question 13

Installing a new sprinkler system is an example of
risk retention.
risk avoidance.
risk transfer.
risk shift.
risk control.

Accepted Answer

The answer of Installing a new sprinkler system is an...

Question 14

Samantha is planning to start a new business. The bank has requested she complete ________ so that her cash flow projections can be more understandable.
a statement of cash flows
a business plan
a consumer analysis
a sales forecast
a risk‒return analysis

Accepted Answer

The answer of Samantha is planning to start a new...

Question 15

When a pharmaceutical maker withdraws a new drug for fear of liability suits, it is practising
risk avoidance.
risk shift.
risk control.
risk transfer.
risk retention.

Accepted Answer

The answer of When a pharmaceutical maker withdraws a new...

Question 16

Conserving the firm's earning power and assets by reducing the threat of losses due to uncontrollable events is ________ management.
disaster
financial
risk
insurance
contingency

Accepted Answer

The answer of Conserving the firm's earning power and assets...

Question 17

Which of the following methods of risk management is a business firm practising when it chooses to terminate its delivery system to avoid the risk of physical damage or injury?
Risk shift
Risk control
Risk transfer
Risk avoidance
Risk retention

Accepted Answer

The answer of Which of the following methods of risk...

Question 18

Blue-sky laws apply mainly to the
operation of local brokerage firms.
sale of new securities.
purchase of shares by insiders.
sale of securities on the secondary market.
issuance of unsecured bonds.

Accepted Answer

The answer of Blue-sky laws apply mainly to the
operation of...

Question 19

Jarvis Corp. is expanding its product line; this is an example of ________ risk.
speculative
avoidance
pure
transferable
financial

Accepted Answer

The answer of Jarvis Corp. is expanding its product line;...

Question 20

Samantha should prepare a cash flow requirements projection because
she can see how much anticipated taxes she will have to pay.
by anticipating shortfalls, she can seek funds in advance and minimize their cost, and by anticipating excess cash she can plan to put funds to work in short-term, interest-bearing investments.
she will be able to plan her vacation.
she will know when to hire extra staff for peak periods.
she will need this information when she is planning for an initial public offering of her company's stock.

Accepted Answer

The answer of Samantha should prepare a cash flow requirements...

Quiz 15: Financial Decisions and Risk Management

If riot police officers are trained to handle violent soccer fans, this is an example of the ________ strategy for risk management. risk avoidance risk transfer risk control risk retention risk shift

Blake Corp. wants to transfer its risk to another organization. Which of the following methods would it most likely use? Surety bonds Fidelity bonds Premiums Contracts Insurance

A firm that buys an insurance policy to protect itself against automobile wrecks is practising risk avoidance. risk transfer. risk acceptance. risk control. risk retention.

Quick-X Corp. has recently sent its delivery drivers to a defensive driving course in order to reduce accidents with company vehicles. This is an example of risk shift. risk control. risk transfer. risk retention. risk avoidance.

The second step in a risk management program is to measure frequency and severity of potential losses. monitor results of the program. evaluate alternatives. implement the program. identify risks and potential losses.

The risk associated with the chance of a warehouse fire is a(n) ________ risk. "act of God" pure speculative financial market

Which one of the following risk management techniques does a firm practise when it chooses self-insurance instead of submitting claims to an insurance company? Risk transfer Risk avoidance Risk retention Risk control Risk shift

The final step in a risk management program is to measure frequency and severity of potential losses. identify risks and potential losses. monitor results of the program. implement the program. evaluate alternatives.

Parker Corp. has decided to pay employee medical costs out of company funds rather than buying insurance. This is an example of risk control. risk avoidance. risk transfer. risk shift. risk retention.

Installing a new sprinkler system is an example of risk retention. risk avoidance. risk transfer. risk shift. risk control.

Samantha is planning to start a new business. The bank has requested she complete ________ so that her cash flow projections can be more understandable. a statement of cash flows a business plan a consumer analysis a sales forecast a risk‒return analysis

When a pharmaceutical maker withdraws a new drug for fear of liability suits, it is practising risk avoidance. risk shift. risk control. risk transfer. risk retention.

Conserving the firm's earning power and assets by reducing the threat of losses due to uncontrollable events is ________ management. disaster financial risk insurance contingency

Which of the following methods of risk management is a business firm practising when it chooses to terminate its delivery system to avoid the risk of physical damage or injury? Risk shift Risk control Risk transfer Risk avoidance Risk retention

Blue-sky laws apply mainly to the operation of local brokerage firms. sale of new securities. purchase of shares by insiders. sale of securities on the secondary market. issuance of unsecured bonds.

Jarvis Corp. is expanding its product line; this is an example of ________ risk. speculative avoidance pure transferable financial