Question 1

________ allow investments to be made, up to a certain percent of invested or total admitted assets, in assets that do not otherwise meet regulatory requirements. If their domiciliary jurisdiction regulations have a this, a life insurer with a business purpose for doing so can make a limited amount of mortgage loans that do not meet regulatory requirements without a reduction in surplus. However, some jurisdictions do exercise some extraterritorial jurisdiction related to it.

Accepted Answer

A)  Loan application 
B)  Basket clause 
C)  Underwriting agreement 
D)  None of these

Question 2

When dividends are left to accumulate at interest, the insurer typically sends a notice to each policyholder showing the amount accumulated at the end of the policy year. The notice also shows the dividend credited and interest earned for that policy year. The dividend left at interest may later be received by or credited to the policyholder in several ways. Which of the following is/are out of those ways?

Accepted Answer

A)  As a cash withdrawal. 
B)  As premium applied to the purchase by the policyholder of paid-up insurance. 
C)  As marketable securities 
D)  As premium to pay up or mature the policy.

Question 3

Scope of Examination and Report of Independent Certified Public Accountant states that:

Accepted Answer

A)  the insurer shall also require that the independent certified public accountant subject the data used by the appointed actuary to testing procedure. 
B)  the insurer shall also require that the group of certified public accountant subject the data used by the appointed actuary to planning procedure. 
C)  the investor shall also require that the independent certified private accountant subject the data used by the appointed actuary to developing procedure. 
D)  the investor shall also require that the independent certified public accountant subject the data used by the appointed actuary to maintaining procedure.

Question 4

What give the issuer the right to retire the bond at certain times, typically if prevailing market interest rates fall below the rate on the bond?

Accepted Answer

A)  Call options 
B)  Prepayment provisions 
C)  Variable income statements 
D)  Investments modules

Question 5

Which of the following id NOT the kind of Insurance?

Accepted Answer

A)  Business policies 
B)  fire and alliance lines 
C)  inland marine 
D)  professional liability

Question 6

The estimated amount receivable from third parties from whom the insured may have the right to recover damages is known as:

Accepted Answer

A)  reduction for subrogation 
B)  reduction for salvation 
C)  reduction for damages 
D)  reduction for paid losses

Question 7

When policy periods expire, the premiums written are earned and are recognized as:

Accepted Answer

A)  Liabilities 
B)  Expenses 
C)  Revenues 
D)  None of the above

Question 8

What represents the amounts needed to provide for the estimated ultimate cost of settling claims relating to insured events that have occurred on or before a particular date?

Accepted Answer

A)  Independent claim adjustment 
B)  Payment of claims 
C)  Insured claim adjustments 
D)  Claim adjustment expenses

Question 9

What is largely systematic that is; all insured risks are strongly affected by certain common influences, like developments in the capital markets?

Accepted Answer

A)  Performance risk 
B)  Non-investment risk 
C)  Investment risk 
D)  Productive risk

Question 10

A mortgage servicer performs all of the servicing functions. The servicer remits all funds received on the serviced loans to the company on a monthly or other periodic basis and usually reports all transactions, including foreclosures and transactions related to foreclosed property. The contract between the company and servicer should provide that the:

Accepted Answer

A)  Company can periodically audit the servicer's records and files pertaining to the loans owned by the company. In lieu of making the audit, the company can agree to receive an annual audit report pertaining to its loans from the servicer's independent certified public accountants. This is the single audit concept 
B)  Servicer should not have a fidelity bond and an errors and omission policy of stipulated minimum amounts 
C)  Servicer must have a fidelity bond and an errors and omission policy of stipulated minimum amounts 
D)  Servicer must have an annual independent audit, with a copy of the audited financial statements sent to the company within a certain period of time after the end of the servicer's fiscal year

Question 11

What encompasses investment income and gains and losses, as well as custody of investment and recordkeeping?

Accepted Answer

A)  Valuation data 
B)  Verification note 
C)  Transaction cycle 
D)  Investment evaluation

Question 12

The adjustments of the premium during the period of coverage based on actual experience during that same period are called:

Accepted Answer

A)  Policy rating 
B)  Schedule rating 
C)  Experience rating 
D)  Retrospective Experience rating

Question 13

What allows an entity to eliminate the reserve that was recorded for the claim, even if it exceeded the amount paid for the settlement?

Accepted Answer

A)  ethical act 
B)  controlled procedure 
C)  structured settlement 
D)  None of the above

Question 14

Revenue risk is defined as:

Accepted Answer

A)  the general administrative costs of insurers include components that do not necessarily vary with the level of the equity markets 
B)  the general administrative costs of investors include components that must necessarily vary with the level of the equity markets 
C)  the particular administrative costs of insurers include components that must necessarily vary with the level of the equity markets 
D)  the general administrative costs of investors include components that do not vary with the level of the equity markets

Question 15

A private agreement to buy or sell a given quantity of an asset such as a currency, interest rate or commodity at a specified future date at a specified price is called:

Accepted Answer

A)  Forward investment plan 
B)  Future agreement plan 
C)  Future Contract 
D)  Forward Contract

Question 16

The maximum error in the population that the auditor is willing to accept is called:

Accepted Answer

A)  Risk of material misstatement 
B)  detection of risk 
C)  Both A & B 
D)  Neither A nor B

Question 17

Changes in existing policies that may result in additional premiums or return premiums, such as increases or decreases in coverage limits, in:

Accepted Answer

A)  Endorsement 
B)  Audit premiums 
C)  Change plan 
D)  Policyholder dividends

Question 18

The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as:

Accepted Answer

A)  Transfer market 
B)  Transport market 
C)  Principal market 
D)  Turn-around market

Question 19

If claims have been reported to the insurer after the contract period, it may several months for the insurer to investigate and establish a case reserve for reported claims.

Accepted Answer

A) True 
 B)False

Question 20

In _______________, an adjustment is based on experience of an individual risk during the term of the policy and is generally subject to maximum and minimum premium limits specified in the policy.

Accepted Answer

A)  Business recordkeeping 
B)  Retrospective premium adjustments 
C)  Premium transaction flow 
D)  Adjusting premiums

Exam 1: Accredited Financial Examiner