Chapter 23—Managing Risk in the Small Business
TRUE/FALSE
1.According to the textbook, risk is a condition in which there will be a known and adverse deviation from a desired outcome that is expected or hoped for.
PTS:
1
REF:
p. 603
OBJ:
23-1 TYPE: D
2.Applied to a business, risk relates to the possibility of losses associated with the firm's reputation.
PTS:
1
REF:
p. 603
OBJ:
23-1 TYPE: D
3.Business risks can be classified into two broad categories—asset risk and pure risk.
PTS:
1
REF:
p. 603
OBJ:
23-1 TYPE: D
4.Pure risk refers to a situation where only loss or no loss can occur—there is no potential gain.
PTS:
1
REF:
p. 603
OBJ:
23-1 TYPE: D
5.Risk management and insurance management are synonymous.
PTS:
1
REF:
p. 609
OBJ:
23-3 TYPE: D
6.A property loss that arises from an inability to carry on normal business operations as a result of a dir-ect loss is called an indirectloss.
PTS:
1
REF:
p. 605
OBJ:
23-2 TYPE: C
7.Risk management in a small firm is essentially the same as risk management in a large firm.
PTS:
1
REF:
p. 611
OBJ:
23-3 TYPE: C
8.Fortunately for the entrepreneur, many property-oriented risks are insurable.
PTS:
1
REF:
p. 603
OBJ:
23-2 TYPE: C

9.Flood damage to movable property is insurable.
PTS:
1
REF:
p. 616
OBJ:
23-5 TYPE: C
10.Nothing can be done to prevent losses from natural disasters.
PTS:
1
REF:
p. 611
OBJ:
23-2 TYPE: C
11.Because of close management, small business owners are less vulnerable to business swindles than are their large firm counterparts.
PTS:
1
REF:
p. 617
OBJ:
23-5 TYPE: C
12.Real property excludes anything physically attached to land, such as buildings.
PTS:
1
REF:
p. 603
OBJ:
23-2 TYPE: D

