Question 1

Property and casualty insurance and life insurance are similar in terms of the predictability of payouts to cover claims. ​

Accepted Answer

A) True 
 B)False  False

Question 2

Under ____, the benefits awarded by the life insurance company to a beneficiary vary with the assets backing the policy. ​

Accepted Answer

A) whole life insurance 
B) term insurance 
C) variable life insurance 
D) universal life insurance 
A) whole life insurance 
B) term insurance 
C) variable life insurance 
D) universal life insurance C

Question 3

Individuals who are insured under a managed health care plan can usually choose any provider of health care services.

Accepted Answer

A) True 
 B)False  False

Question 4

Those insurance companies whose claims are ____ predictable need to maintain ____ liquidity.

Accepted Answer

A) less; less 
B) more; more 
C) less; more 
D) None of these are correct. 
A) less; less 
B) more; more 
C) less; more 
D) None of these are correct.

Question 5

Property and casualty (PC)insurance companies may use cash flow underwriting, in which they tend to lower their premium prices as interest rates rise.  ​

Accepted Answer

A) True 
 B)False

Question 6

Group insurance policies are very popular for employers and employees. ​

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT a characteristic commonly assessed by insurance regulators to detect any problems at an insurance company?

Accepted Answer

A) liquidity of the asset portfolio 
B) relative size of operating expenses 
C) return on investment 
D) All of these are assessed by regulators. 
A) liquidity of the asset portfolio 
B) relative size of operating expenses 
C) return on investment 
D) All of these are assessed by regulators.

Question 8

Real estate values usually have little impact on the market value of a life insurance company's asset portfolio and only affect property and casualty insurance companies. ​

Accepted Answer

A) True 
 B)False

Question 9

_____ insurance provides a financial payout if specified employees of a business become disabled or die.

Accepted Answer

A) Best person 
B) Employment liability 
C) Key employee 
D) Credit line 
A) Best person 
B) Employment liability 
C) Key employee 
D) Credit line

Question 10

Life insurance companies can attempt to reduce their exposure to interest rate risk by ​

Accepted Answer

A) increasing their proportion of long-term assets. 
B) diversifying the age distribution of their customer base. 
C) increasing their proportion of short-term assets. 
D) concentrating on an older age distribution of their customer base. 
A) increasing their proportion of long-term assets. 
B) diversifying the age distribution of their customer base. 
C) increasing their proportion of short-term assets. 
D) concentrating on an older age distribution of their customer base.

Question 11

Which of the following is NOT involved in the regulation of the insurance industry?

Accepted Answer

A) National Association of Insurance Commissioners (NAI
C)  
B) Insurance Regulatory Information System (IRIS) 
C) Federal Deposit Insurance Corporation (FDI
C)  
D) All of these are involved in regulating the insurance industry. 
A) National Association of Insurance Commissioners (NAI
C)  
B) Insurance Regulatory Information System (IRIS) 
C) Federal Deposit Insurance Corporation (FDI
C)  
D) All of these are involved in regulating the insurance industry.

Question 12

The largest single source of funds for a life insurance company is

Accepted Answer

A) life insurance premiums. 
B) annuity plans. 
C) health insurance premiums. 
D) investment income. 
E) None of these are correct. 
A) life insurance premiums. 
B) annuity plans. 
C) health insurance premiums. 
D) investment income. 
E) None of these are correct.

Question 13

The ratio of an insurance company's net profit to policyholders' surplus is called the

Accepted Answer

A) liquidity ratio. 
B) return on net worth. 
C) net underwriting margin. 
D) return on assets. 
A) liquidity ratio. 
B) return on net worth. 
C) net underwriting margin. 
D) return on assets.

Question 14

____ insurance covers losses due to dishonest employees.

Accepted Answer

A) Key employee 
B) Credit line 
C) Malpractice 
D) Fidelity bond 
A) Key employee 
B) Credit line 
C) Malpractice 
D) Fidelity bond

Question 15

____ are the most popular assets of life insurance companies.

Accepted Answer

A) Corporate debt securities and stocks 
B) Treasury securities 
C) Mortgages and mortgage-backed securities 
D) State and local bonds 
A) Corporate debt securities and stocks 
B) Treasury securities 
C) Mortgages and mortgage-backed securities 
D) State and local bonds

Question 16

____ insurance covers losses due to a contract not being fulfilled. ​

Accepted Answer

A) Fidelity bond 
B) Credit line 
C) Surety bond 
D) Business interruption 
A) Fidelity bond 
B) Credit line 
C) Surety bond 
D) Business interruption

Question 17

Bond insurance is available only for corporate bonds and not for municipal securities. ​

Accepted Answer

A) True 
 B)False

Question 18

Policyholders who prefer to invest their savings themselves will likely opt for whole life insurance over term insurance. ​

Accepted Answer

A) True 
 B)False

Question 19

With a(n)____ insurance policy, the benefits awarded by the life insurance company to the beneficiary differ, depending on the assets backing the policy.

Accepted Answer

A) universal life 
B) whole life 
C) variable life 
D) group life 
E) None of these are correct. 
A) universal life 
B) whole life 
C) variable life 
D) group life 
E) None of these are correct.

Question 20

The ____ facilitates cooperation among the various state agencies whenever an insurance issue is a national concern.

Accepted Answer

A) Securities and Exchange Commission 
B) Federal Deposit Insurance Corporation 
C) National Association of Insurance Commissioners 
D) National Association of Securities Dealers 
E) None of these are correct. 
A) Securities and Exchange Commission 
B) Federal Deposit Insurance Corporation 
C) National Association of Insurance Commissioners 
D) National Association of Securities Dealers 
E) None of these are correct.

Exam 25: Insurance and Pension Fund Operations

Property and casualty insurance and life insurance are similar in terms of the predictability of payouts to cover claims. ​

Under ____, the benefits awarded by the life insurance company to a beneficiary vary with the assets backing the policy. ​

Individuals who are insured under a managed health care plan can usually choose any provider of health care services.

Those insurance companies whose claims are ____ predictable need to maintain ____ liquidity.

Property and casualty (PC)insurance companies may use cash flow underwriting, in which they tend to lower their premium prices as interest rates rise. ​

Group insurance policies are very popular for employers and employees. ​

Which of the following is NOT a characteristic commonly assessed by insurance regulators to detect any problems at an insurance company?

Real estate values usually have little impact on the market value of a life insurance company's asset portfolio and only affect property and casualty insurance companies. ​

_____ insurance provides a financial payout if specified employees of a business become disabled or die.

Life insurance companies can attempt to reduce their exposure to interest rate risk by ​

Which of the following is NOT involved in the regulation of the insurance industry?

The largest single source of funds for a life insurance company is

The ratio of an insurance company's net profit to policyholders' surplus is called the

____ insurance covers losses due to dishonest employees.

____ are the most popular assets of life insurance companies.

____ insurance covers losses due to a contract not being fulfilled. ​

Bond insurance is available only for corporate bonds and not for municipal securities. ​

Policyholders who prefer to invest their savings themselves will likely opt for whole life insurance over term insurance. ​

With a(n)____ insurance policy, the benefits awarded by the life insurance company to the beneficiary differ, depending on the assets backing the policy.

The ____ facilitates cooperation among the various state agencies whenever an insurance issue is a national concern.

Role of Financial Markets and Institutions

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Thrift Operations

Finance Company Operations

Mutual Fund Operations

Securities Operations

Pension Fund Operations

Filters

Property and casualty insurance and life insurance are similar in terms of the predictability of payouts to cover claims.

Under ____, the benefits awarded by the life insurance company to a beneficiary vary with the assets backing the policy.

Those insurance companies whose claims are predictable need to maintain liquidity.

Property and casualty (PC)insurance companies may use cash flow underwriting, in which they tend to lower their premium prices as interest rates rise.

Group insurance policies are very popular for employers and employees.

Real estate values usually have little impact on the market value of a life insurance company's asset portfolio and only affect property and casualty insurance companies.

Life insurance companies can attempt to reduce their exposure to interest rate risk by

____ insurance covers losses due to a contract not being fulfilled.

Bond insurance is available only for corporate bonds and not for municipal securities.

Policyholders who prefer to invest their savings themselves will likely opt for whole life insurance over term insurance.