8 Types of Surety Bonds Quiz

Which one of the following types of surety bonds might be required for a street food vendor? -A permit bond -A maintenance bond -A contract bond -A fiduciary bond

A permit bond

Clarence entered into a contract bond that guarantees his insulation work will be free from defects in materials and workmanship for a specified period of five years after completion of the work. The type of bond used by Clarence is a Select one: A. Maintenance bond. B. Performance bond. C. License and permit bond. D. Bid bond.

A. Maintenance bond.

Contractor Jerry provides a bid bond guaranteeing he will enter into a construction contract if his bid is accepted by business owner Sue. If Jerry's bid is accepted, but he fails to enter into a construction contract, the issuer of the bid bond would pay Sue which one of the following? Select one: A. The difference between the amount of Jerry's bid and the next lowest bid accepted plus additional expenses incurred due to Jerry's default B. Nothing, since Jerry did not enter into a construction contract C. The bond's "penalty" amount D. The full amount of Jerry's bid

A. The difference between the amount of Jerry's bid and the next lowest bid accepted plus additional expenses incurred due to Jerry's default CorrectCorrect. If Jerry fails to fulfill his obligation, the surety will pay Sue the difference between the amount of Jerry's bid and the next lowest bid accepted plus additional expenses incurred due to Jerry's default.

A payment bond is a contract bond guaranteeing which one of the following? Select one: A. The project will be free of liens. B. The obligee will receive payment for loss or damage resulting from violation of the duties imposed on the licensee. C. A person appointed by a court to administer the property of others will faithfully perform his or her duties. D. The work will be free from defects in materials and workmanship for a specified period after the project is completed.

A. The project will be free of liens. CorrectCorrect. A payment bond is a contract bond guaranteeing the project will be free of liens.

A bond that guarantees that investors will be paid both the interest due on municipal bonds and the principal when the bond matures is a Select one: A. Judicial bond B. Credit enhancement financial guaranty bond. C. Consumer protection bond. D. Fiduciary bond.

B. Credit enhancement financial guaranty bond. CorrectCorrect. A credit enhancement financial guaranty bond guarantees that investors will receive the interest due on municipal bonds as well as the principal when the bond matures

Darlene was appointed by a court as conservator of her aunt's estate. If Darlene is required to post a bond with the court it would most likely be a Select one: A. Payment bond. B. Fiduciary bond. C. Performance bond. D. Financial guarantee bond.

B. Fiduciary bond. CorrectCorrect. If Darlene is required to post a bond with the court it would most likely be a fiduciary bond requiring her to administer the property of her aunt and to faithfully perform her duties as conservator.

Contract bonds fall into several categories

Bid bond Performance bond Payment bond Maintenance bond

A contract bond is a surety bond that can be used to guarantee the fulfillment of obligations under which one of the following? Select one: A. Judicial agreements and contracts B. Fiduciary agreements C. Construction contracts D. Licensing requirements

C. Construction contracts CorrectCorrect. A contract bond is a surety bond guaranteeing the fulfillment of obligations under construction contracts or other types of contracts.

Officials generally required to obtain public official bonds include those whose duties involve which one of the following? Select one: A. Paying of court judgments if appeals fail. B. Guaranteeing that work will be completed according to the contract. C. Seizing or disposing of property. D. Exercising a privilege in connection with a business.

C. Seizing or disposing of property.

What type of bond guarantees that a construction contractor will enter into a contract? Select one: A. Performance bond B. Maintenance bond C. Payment bond D. Bid bond

D. Bid bond

Fiduciary bonds are commonly required of a person who does which one of the following? Select one: A. Acts as treasurer for public funds B. Wishes to appeal an adverse court decision C. Disputes the ownership of personal property D. Holds property in trust for the benefit of others

D. Holds property in trust for the benefit of others CorrectCorrect. Fiduciary bonds are commonly required of a person who holds property in trust for the benefit of others.

What two purposes do contract bonds serve?

a. The surety's willingness to furnish the bond is evidence that, in the surety's judgment, the principal is qualified to fulfill the terms of the contract. b. The surety guarantees that, even if the principal defaults, the obligations of the contract will be performed or the surety will indemnify the obligee.