Test Bank Managing the Law, 6e (McInnes)
Chapter 01: Risk Management and Sources of Law
True/False Questions
1. The law can affect a business both positively and negatively. It often prohibits actions that otherwise
would be possible. However, it sometimes permits parties to do something that they could not otherwise
do.
a True
b False
Difficulty: 2
QuestionID: 01-1-01
Topic: Why Study Law?
Skill: Recall
Answer: a. True
2. Beta Inc has recently discovered that a defect in one of its products poses a risk of injury to consumers.
Its only option, from a legal risk management perspective, is to eliminate the risk of liability by removing
the product from the market.
a True
b False
Difficulty: 2
QuestionID: 01-1-02
Topic: Risk Management
Skill: Applied
Answer: b. False
3. As described in the text, the four forms of risk management are risk avoidance, risk elimination, risk
transfer, and risk acceptance.
a True
b False
Difficulty: 1
QuestionID: 01-1-03
Topic: Risk Management
Skill: Recall
Answer: b. False
4. Sabeka Inc has discovered that one of its products may cause consumers to suffer a certain form of
property damage. In response to that risk, the company has written an exclusion clause into its sales
contracts. In doing so, it has adopted a form of risk management known as risk shifting.
1
Chapter 01: Risk Management and Sources of Law
True/False Questions
1. The law can affect a business both positively and negatively. It often prohibits actions that otherwise
would be possible. However, it sometimes permits parties to do something that they could not otherwise
do.
a True
b False
Difficulty: 2
QuestionID: 01-1-01
Topic: Why Study Law?
Skill: Recall
Answer: a. True
2. Beta Inc has recently discovered that a defect in one of its products poses a risk of injury to consumers.
Its only option, from a legal risk management perspective, is to eliminate the risk of liability by removing
the product from the market.
a True
b False
Difficulty: 2
QuestionID: 01-1-02
Topic: Risk Management
Skill: Applied
Answer: b. False
3. As described in the text, the four forms of risk management are risk avoidance, risk elimination, risk
transfer, and risk acceptance.
a True
b False
Difficulty: 1
QuestionID: 01-1-03
Topic: Risk Management
Skill: Recall
Answer: b. False
4. Sabeka Inc has discovered that one of its products may cause consumers to suffer a certain form of
property damage. In response to that risk, the company has written an exclusion clause into its sales
contracts. In doing so, it has adopted a form of risk management known as risk shifting.
1
