Which of the following best describes the fidelity bond?

The fidelity bond is specifically designed to provide a guarantee against employee dishonesty. This type of bond protects employers from financial loss caused by fraudulent activities performed by their employees, such as theft, embezzlement, or forgery. By securing a fidelity bond, employers gain assurance that they can recover a certain amount of losses incurred due to dishonest acts carried out by their staff. This makes it an essential tool for businesses that need protection against potential internal theft and unethical behavior involving company assets or funds.

The other options do not accurately represent what a fidelity bond entails. For instance, while theft by outsiders is covered under different policies, such as general liability or crime insurance, it does not pertain to employee actions. Health insurance, which focuses on medical expenses and healthcare coverage, is entirely separate from fidelity bonds. Similarly, an investment protection plan is unrelated to the fidelity bond's purpose and function. Understanding the specific role of fidelity bonds in mitigating the risks associated with employee dishonesty is crucial for businesses seeking comprehensive risk management strategies.