CEM 100 Chapter 7 Test Questions
and Answers
The bond that guarantees that the contract will be completed with the owner receiving
its structure and built in accordance with contract plus covers the standard warranty
period of normally one year is the ____ - Answer- performance bond
Concerning bonding capacity for a general contractor on a building construction project
where 80 percent of the work will be subcontracted, the multiple based on financial
information from the balance sheet is applied to the subject general contractor may be
____ or more. - Answer- 10-20 times
The private organization that rates surety firms as to their financial stability and other
similar measures is the - Answer- A.M. Best Company
The ____ guarantees the owner that the contract will honor its bid and will sign all
contract documents if awarded the contract - Answer- None of these
Concerning payment bonds, on public construction projects these payment bonds are
____ in form whereas on private construction projects these payment bonds are ____ in
form. - Answer- statutory, common-law
The Miller Act concerns surety bonding as it applies to construction contracts involving
____ projects - Answer- federal construction
____ is the term used for the contractors failing to fulfill one or more provisions of the
bond instrument - Answer- default
A ____ bond indemnifies the contractor for loss of money or other property caused by
the dishonest acts of its bonded employees - Answer- fidelity
Combined performance and payment bonds can be issued on projects under this single
type of bond, there is a ___ between the owner and persons furnishing labor and
material for the project - Answer- potential conflict of interest
In determining the bonding capacity of a contractor, this is the amount commonly
determined based on a multiple of the contractors ____ - Answer- net quick worth
Surety bonds are required by law on federal public construction jobs over $25,000 by
the ____Act - Answer- Miller
and Answers
The bond that guarantees that the contract will be completed with the owner receiving
its structure and built in accordance with contract plus covers the standard warranty
period of normally one year is the ____ - Answer- performance bond
Concerning bonding capacity for a general contractor on a building construction project
where 80 percent of the work will be subcontracted, the multiple based on financial
information from the balance sheet is applied to the subject general contractor may be
____ or more. - Answer- 10-20 times
The private organization that rates surety firms as to their financial stability and other
similar measures is the - Answer- A.M. Best Company
The ____ guarantees the owner that the contract will honor its bid and will sign all
contract documents if awarded the contract - Answer- None of these
Concerning payment bonds, on public construction projects these payment bonds are
____ in form whereas on private construction projects these payment bonds are ____ in
form. - Answer- statutory, common-law
The Miller Act concerns surety bonding as it applies to construction contracts involving
____ projects - Answer- federal construction
____ is the term used for the contractors failing to fulfill one or more provisions of the
bond instrument - Answer- default
A ____ bond indemnifies the contractor for loss of money or other property caused by
the dishonest acts of its bonded employees - Answer- fidelity
Combined performance and payment bonds can be issued on projects under this single
type of bond, there is a ___ between the owner and persons furnishing labor and
material for the project - Answer- potential conflict of interest
In determining the bonding capacity of a contractor, this is the amount commonly
determined based on a multiple of the contractors ____ - Answer- net quick worth
Surety bonds are required by law on federal public construction jobs over $25,000 by
the ____Act - Answer- Miller
