Question 1

The method which assumes that an entity's experience in estimating case-basis reserves will be repeated in the future is called:

Accepted Answer

A)  Paid loss projection 
B)  Reported loss development projection 
C)  Incurred loss projection 
D)  Internal entity loss projection

Question 2

What is the act in which the main sections are for Canadian companies and for foreign companies?

Accepted Answer

A)  Investment reimbursement Act 
B)  Insurance Companies Act 
C)  Regulatory Act 
D)  Revenue-earned Act

Question 3

A mismatch in the timing of asset maturities relative to policy benefits requiring either reinvestment or disinvestment by the insurer at uncertain future interest rates is known as:

Accepted Answer

A)  Reliable Mismatch Risk 
B)  Maturity Mismatch Risk 
C)  Change Mismatch Risk 
D)  Risk Variance

Question 4

Which of the following is NOT the kind of public entity risk pools?

Accepted Answer

A)  risk-avoiding pools 
B)  insurance-purchasing pools 
C)  banking pools 
D)  claim-serving pools

Question 5

What is the purpose of consolidated financial statements?

Accepted Answer

A)  These statements are intended to reflect the financial position and results of operations of an economic entity rather than a legal entity. 
B)  These statements are intended to ignore the financial position and results of operations of an economic entity rather than an unofficial entity. 
C)  These statements are intended to reflect the financial position and results of operations of a credited entity rather than a supplemental entity. 
D)  None of the above

Question 6

The difference between the purchase price and the repurchase price, or sale price, plus accrued interest on the security represents:

Accepted Answer

A)  Accounting agreement 
B)  Investment income 
C)  Dollar price 
D)  Saving price

Question 7

Insurers issuing participating policies sometimes incur dividends which have been earned but which have not been disbursed or otherwise credited as of the financial statement date. Such dividends represent a due and unpaid liability amount. Reasons why dividends may be due and unpaid include all of the following EXCEPT:

Accepted Answer

A)  Premium payment transactions not recorded within the last processing cycle for the reporting period. 
B)  All premiums paid to the anniversary date 
C)  The policy anniversary date is near the end of the calendar year and the policyholder has elected to receive dividends in cash, but the cash dividend has not yet been disbursed 
D)  The policy anniversary date is near the end of the calendar year and the policyholder has elected to have the dividend reduce the premiums, but the premium for the next policy year has not yet been received

Question 8

National Association of Insurance Commissioners stated that, has no effect on the valuation of securities for statutory accounting purposes, provided the amount of the collateral at least equals the required collateral.

Accepted Answer

A)  Safety act 
B)  Investment security 
C)  Insurance track 
D)  Securities lending

Question 9

What technique uses a risk-adjusted discount rate and contractual, promised, or most likely cash flows?

Accepted Answer

A)  Asset/Liability weighted 
B)  Fair value 
C)  Present value 
D)  Discount rate adjustment

Question 10

It is defined as a debt restructuring whereby the insurer for economic or legal reasons related to borrower financial difficulties, grants a concession to the debtor that it would not otherwise grant.

Accepted Answer

A)  A troubled debt restructuring 
B)  Commercial debt restructuring 
C)  Mortgage debt restructuring 
D)  Residential debt restructuring

Question 11

The contracts that are not subject to unilateral changes in its provision and requires the performance of various functions and services for an extended period is called:

Accepted Answer

A)  Short-duration 
B)  Long-duration 
C)  Medium-duration 
D)  Fixed-duration

Question 12

Financial Statements provide additional valuable information on the loans. Some of the more significant information provided includes EXCEPT:

Accepted Answer

A)  The valuation of the mortgage loan portfolio, including a description of the valuation basis for mortgage loans and income recognition 
B)  The recorded investment and interest past due on mortgages with interest more than 90 days past due 
C)  The recorded investment and number of mortgages on which interest has been reduced, and the percent the interest was reduced 
D)  Disclosures of impaired loans: The total recorded investment in impaired loans at the end of each period

Question 13

Which of the following is the significant requirement for ongoing regulatory reporting to the Office of the Superintendent of Financial Institutions ("OSFI")?

Accepted Answer

A)  The monthly Return 
B)  Capital Adequacy Return 
C)  Constraints of Sound Business 
D)  Static Capital Adequacy Test

Question 14

The securities repurchased have the same stated interest rate as, and maturities similar to, the securities sold and are generally priced to result in substantially the same yield is known as:

Accepted Answer

A)  Yield-maintenance agreements 
B)  Variable-coupon agreements 
C)  Fixed-coupon agreement 
D)  None of the above

Question 15

____________ is considered to be self-sustaining if it is financially and operationally independent of the reporting enterprise.

Accepted Answer

A)  Retrocession 
B)  Reinsurance 
C)  Portfolio Investments 
D)  Foreign operation

Question 16

Tax Act states that:

Accepted Answer

A)  A life insurer is subject to an investment income tax of 15 percent on its 'net Canadian life investment income 
B)  A life insurer is subject to an investment income tax of 25 percent on its 'net Canadian life investment income 
C)  A life insurer is subject to an investment income tax of 35 percent on its 'net Canadian life investment income 
D)  A life insurer is subject to an investment income tax of 45 percent on its 'net Canadian life investment income

Question 17

What may leave more risk than a company should prudently assume due to the risk exacerbating features of a particular product?

Accepted Answer

A)  Feasible investment strategy 
B)  Design strategy 
C)  Risk strategy 
D)  Product risk strategy

Question 18

Monetary items and non-monetary items carried at market value are translated into the reporting currency at the rate of exchange in effect on the balance sheet date under:

Accepted Answer

A)  Dependency method 
B)  Equity method 
C)  Temporal method 
D)  Cash inflow/outflow method

Question 19

Adjusting and Others (AO) reserves are often provided for by using the calendar year paid-to-paid method rather than the accident year paid-to-paid method used for Inflation in Defense & Cost Containment (DCC) reserves.

Accepted Answer

A) True 
 B)False

Question 20

________________ is an agreement between two counterparties to enter into a particular transaction at a specified date in the future at an agreed-upon price.

Accepted Answer

A)  Future decision 
B)  Future agreement 
C)  Future contract 
D)  Future cost plan

Exam 1: Accredited Financial Examiner