CPCU 520 EXAM GUIDE 2026 VERIFIED FULL
QUESTIONS & DETAILED SOLUTIONS
Module 1: Management Fundamentals & Organizational Behavior
1. Which management function is primarily concerned with setting goals and determining the
best way to achieve them?
a) Organizing
b) Leading
c) Controlling
d) Planning ✓
Explanation: Planning involves defining organizational goals and establishing strategies.
2. According to Herzberg's Two-Factor Theory, which of the following is considered a
"motivator"?
a) Salary
b) Job Security
c) Working Conditions
d) Recognition ✓
Explanation: Herzberg's motivators (like achievement, recognition, the work itself) lead to
satisfaction, while hygiene factors (salary, security) prevent dissatisfaction.
3. A corporate culture that is characterized by flexibility, internal focus, and integration is best
described as:
a) Clan culture
b) Adhocracy culture
c) Market culture
d) Hierarchy culture ✓
Explanation: Based on the Competing Values Framework, hierarchy culture emphasizes stability,
control, and internal efficiency.
Module 2: Strategic Planning & Decision Making
4. In a SWOT analysis, a new regulation that increases compliance costs is typically classified
as a(n):
, a) Strength
b) Weakness
c) Threat ✓
d) Opportunity
Explanation: External factors that could harm the organization are threats.
5. The first step in the rational decision-making model is:
a) Define the problem ✓
b) Identify decision criteria
c) Generate alternatives
d) Allocate weights to criteria
Explanation: A clear problem definition must come before any analysis or solution generation.
Module 3: Human Resources & Talent Management
6. Which law prohibits discrimination based on race, color, religion, sex, or national origin?
a) ADA
b) Title VII of the Civil Rights Act ✓
c) FMLA
d) FLSA
Explanation: Title VII is the foundational federal anti-discrimination law.
7. A performance review method that uses specific, measurable performance standards
derived from the job itself is called a(n):
a) 360-degree feedback
b) Behaviorally Anchored Rating Scale (BARS) ✓
c) Management by Objectives (MBO)
d) Graphic rating scale
Explanation: BARS uses behavioral anchors to rate performance more objectively.
Module 4: Finance & Accounting for Managers
8. On a balance sheet, "Unearned Premium" is classified as a(n):
a) Asset
b) Liability ✓
c) Expense
d) Owner's Equity
QUESTIONS & DETAILED SOLUTIONS
Module 1: Management Fundamentals & Organizational Behavior
1. Which management function is primarily concerned with setting goals and determining the
best way to achieve them?
a) Organizing
b) Leading
c) Controlling
d) Planning ✓
Explanation: Planning involves defining organizational goals and establishing strategies.
2. According to Herzberg's Two-Factor Theory, which of the following is considered a
"motivator"?
a) Salary
b) Job Security
c) Working Conditions
d) Recognition ✓
Explanation: Herzberg's motivators (like achievement, recognition, the work itself) lead to
satisfaction, while hygiene factors (salary, security) prevent dissatisfaction.
3. A corporate culture that is characterized by flexibility, internal focus, and integration is best
described as:
a) Clan culture
b) Adhocracy culture
c) Market culture
d) Hierarchy culture ✓
Explanation: Based on the Competing Values Framework, hierarchy culture emphasizes stability,
control, and internal efficiency.
Module 2: Strategic Planning & Decision Making
4. In a SWOT analysis, a new regulation that increases compliance costs is typically classified
as a(n):
, a) Strength
b) Weakness
c) Threat ✓
d) Opportunity
Explanation: External factors that could harm the organization are threats.
5. The first step in the rational decision-making model is:
a) Define the problem ✓
b) Identify decision criteria
c) Generate alternatives
d) Allocate weights to criteria
Explanation: A clear problem definition must come before any analysis or solution generation.
Module 3: Human Resources & Talent Management
6. Which law prohibits discrimination based on race, color, religion, sex, or national origin?
a) ADA
b) Title VII of the Civil Rights Act ✓
c) FMLA
d) FLSA
Explanation: Title VII is the foundational federal anti-discrimination law.
7. A performance review method that uses specific, measurable performance standards
derived from the job itself is called a(n):
a) 360-degree feedback
b) Behaviorally Anchored Rating Scale (BARS) ✓
c) Management by Objectives (MBO)
d) Graphic rating scale
Explanation: BARS uses behavioral anchors to rate performance more objectively.
Module 4: Finance & Accounting for Managers
8. On a balance sheet, "Unearned Premium" is classified as a(n):
a) Asset
b) Liability ✓
c) Expense
d) Owner's Equity
