CPCU 530 Practice Exam 2


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1. Executive Order 11246 prohibits employers with federal contracts from:

2. The parol evidence rule is a rule of evidence that limits terms of a written contract to those terms expressed in writing. Under this rule, a party may:

3. If a dispute arises between the insurer and the insured with respect to the meaning of certain policy terms, the courts usually rule in favor of the insured because:

4. When an insurer that knows of grounds for forfeiture manages the defense of a lawsuit against the insured without giving timely notice of its reservation of rights, the insurer:

5. If a contract for the sale of goods does not contain a stated sales price for the goods, the contract is:

6. Marvin is an insurance agent who has insurance contracts with a variety of insurers. He does not have a contract with InsureCo. Marvin recently sent business to InsureCo, and InsureCo issued policies, sending the appropriate commission to Marvin. InsureCo also sent Marvin application forms so Marvin could solicit more business for InsureCo. Which one of the following statements is correct regarding Marvin’s authority?

7. Vince hired Becky to bid on an autographed baseball at an auction. He told her not to bid more than $1,500. Becky won the baseball at the auction, but her winning bid was $4,000, which she paid to the auction company. She gave the baseball to Vince, who accepted it. Vince must pay Becky:

8. Donna said to her friend Ron, “I will not sell my property for less than $5,000.” Ron then replied, “I accept your offer.” In this situation, a contract:

9. Stacy dropped her clothing off at the dry cleaner for cleaning and pressing. One night, when the dry cleaner was closed, a truck crashed into the premises, destroying Stacy’s clothes. The dry cleaner can avoid liability for the destroyed clothes if it can show that it exercised the appropriate level of care regarding the property. In this scenario, the appropriate level of care is:

10. Company 1 is in the process of taking over ownership of Company 2. To facilitate the takeover, Company 1 offers to purchase the stock of Company 2 directly from the shareholders of Company 2 at a price in excess of the market value. This strategy for achieving a takeover is known as a: