Question

what does purchasing insurance for a business reveal about the business owners attitude toward financial risk?
○ it shows that the owner expects financial risk and is eliminating it by making an insurance company liable.
○ it shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company.
○ it shows that the owner is willing to share ownership of the business to reduce financial risk.
○ it shows that the owner is willing to budget for short - term financial risks to avoid long - term risks.

Explanation:

• Option 1: Insurance doesn't eliminate risk (it transfers), so this is wrong.
• Option 2: Purchasing insurance means the owner knows risks exist and pays premiums to transfer the risk to the insurer. This matches the concept of risk transfer in business finance.
• Option 3: Insurance has nothing to do with sharing business ownership, so this is incorrect.
• Option 4: Insurance isn't about budgeting short - term to avoid long - term in this way; it's about risk transfer, so this is wrong.

Answer:

B. It shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company.