Which of the following correctly describes common characteristics of Fidelity Bonds?

Fidelity bonds are designed to protect businesses from losses caused by dishonest or fraudulent acts of employees. The correct choice highlights that these bonds specifically provide coverage for insured acts that occur during the bond period. This means that if an employee engages in a dishonorable act, such as theft or embezzlement, while the fidelity bond is in effect, the business can file a claim to recover the financial losses incurred as a result of that act.

The bond's purpose is to mitigate risk associated with employee dishonesty by ensuring that there is financial protection in place if such actions take place during the defined timeframe of the bond. The critical aspect here is that the coverage is strictly linked to occurrences that transpire during the bond period, which reinforces the importance of the timing of the acts in relation to the bond's validity.

Understanding this characteristic of fidelity bonds helps clarify their role in risk management for businesses, particularly regarding the financial impacts of trust placed in employees. The other options do not accurately reflect the nature of fidelity bonds and their coverage specifics.