Question 1

Home office record-maintenance methods may include:

Accepted Answer

A)  duplication of branch records 
B)  maintenance of detailed entries for analytical purposes 
C)  use of planning procedures from main office for both premiums and cash 
D)  All of the above

Question 2

In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:

Accepted Answer

A)  source of financing 
B)  nature of outputs 
C)  price drivers 
D)  location of the market

Question 3

On both old and new business, companies can also avoid premium notes by entering into agreements involving deposits of a portion of the premium with an extension on the balance. These deposits are treated as:

Accepted Answer

A)  A liability 
B)  Unearned revenue and not credited to income until the deposit is used to pay the premium 
C)  A liability and not credited to income until the deposit is used to pay the premium 
D)  Asset and not credited to income until the deposit is used to pay the premium

Question 4

With fixed deferred annuities;

Accepted Answer

A)  the credited rate is determined fiscally and declared by the insurance company 
B)  the debited rate is periodically re-determined and declared by the organization 
C)  the credited rate is periodically re-determined and declared by the insurance company 
D)  the debited rate is determined fiscally and declared by the organization

Question 5

A lower net retention level typically would translate into a higher v\variability of reserves.

Accepted Answer

A) True 
 B)False

Question 6

As defined in Accounting Standards Codification, dollar purchase agreements are the agreements to sell and repurchase similar and identical securities.

Accepted Answer

A) True 
 B)False

Question 7

Generally, a company earns a servicing fee when it retains the servicing of a block of loans in which it has sold all or part of the block. Service fees received from sales of participations are recorded as:

Accepted Answer

A)  Gross income and not netted against interest income remitted to the acquiring party 
B)  Unearned revenue and not netted against interest income remitted to the acquiring party 
C)  Gross income 
D)  Netted against interest income remitted to the acquiring party

Question 8

Subsequent to the funding of a loan, the most common document/s obtained is/are:

Accepted Answer

A)  New or updated appraisals as evidence of the current value of the property 
B)  Current financial statements on the borrower or the property, if the property is income producing, as evidence of the borrower's continuing financial strength and of the property's continuing ability to produce income 
C)  Periodic inspection reports as evidence of the physical condition of the property 
D)  Borrower's financial statements

Question 9

What is derived from its future cash flows, adjusted for risk as well as any other relevant economic characteristics?

Accepted Answer

A)  Financial value 
B)  Future cost value 
C)  Liability fair value 
D)  Statutory cost value

Question 10

A metric is a measurement standard or yardstick for quantifying Asset/Liabilities Management (ALM) risk.

Accepted Answer

A) True 
 B)False

Question 11

SAP stresses measurement of emerging earnings of a business from period to period while GAAP stresses measurement of the ability to pay claims in the future.

Accepted Answer

A) True 
 B)False

Question 12

The two basic methods for billing premiums are:

Accepted Answer

A)  policy and direct billing 
B)  agency and direct billing 
C)  collecting and indirect billing 
D)  business and direct billing

Question 13

Which control includes the procedures for system design, including the acquisition of software packages, should encourage active participation by the accounting department and internal auditors?

Accepted Answer

A)  Organizations and operations control 
B)  System development control 
C)  Access control 
D)  Procedural control

Question 14

Fidelity bonds cover employees against dishonest acts by employees.

Accepted Answer

A) True 
 B)False

Question 15

With which standard, the auditor's substantive procedures must include reconciling the financial statements to the accounting records and should include examining material adjustments made during the course of preparing the financial statements.

Accepted Answer

A)  Integrated Audit Financial Statement 
B)  Public Company Accounting Oversight Board 
C)  Audit of Financial Reporting over Internal Control 
D)  National Association of Insurance Commission

Question 16

The entity transferring the risk is called the ceding entity and the entity to which the risk is transferred is called the assuming entity.

Accepted Answer

A) True 
 B)False

Question 17

Dollar rolls differ from regular repurchase agreements due to which of the following characteristics in the securities sold and repurchased.

Accepted Answer

A)  they are represented by different certificates 
B)  they are collateralized by different but similar mortgage pools 
C)  they generally have different principal amounts 
D)  All of the above

Question 18

___________ is an amount of money, loaned at interest for a specified term, secured by real estate and by its improvements such as buildings and infrastructure. This form of instrument itself varies by jurisdiction, but the debt is always evidenced by an accompanying promissory note.

Accepted Answer

A)  Mortgage Loan 
B)  Real estate lending 
C)  Conventional Commercial Loans 
D)  CMBS

Question 19

Coverage of risks that do not fit normal underwriting patterns and that are not commensurate with standard rates is normally refers to as:

Accepted Answer

A)  Surplus lines 
B)  Commercial lines 
C)  Risk lines 
D)  Standardized lines

Question 20

What is considered "pure" mortality protection?

Accepted Answer

A)  Life insurance 
B)  Premium plan 
C)  Transience policy 
D)  Assurance plan

Exam 1: Accredited Financial Examiner

Home office record-maintenance methods may include:

In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:

On both old and new business, companies can also avoid premium notes by entering into agreements involving deposits of a portion of the premium with an extension on the balance. These deposits are treated as:

With fixed deferred annuities;

A lower net retention level typically would translate into a higher v\variability of reserves.

As defined in Accounting Standards Codification, dollar purchase agreements are the agreements to sell and repurchase similar and identical securities.

Generally, a company earns a servicing fee when it retains the servicing of a block of loans in which it has sold all or part of the block. Service fees received from sales of participations are recorded as:

Subsequent to the funding of a loan, the most common document/s obtained is/are:

What is derived from its future cash flows, adjusted for risk as well as any other relevant economic characteristics?

A metric is a measurement standard or yardstick for quantifying Asset/Liabilities Management (ALM) risk.

SAP stresses measurement of emerging earnings of a business from period to period while GAAP stresses measurement of the ability to pay claims in the future.

The two basic methods for billing premiums are:

Which control includes the procedures for system design, including the acquisition of software packages, should encourage active participation by the accounting department and internal auditors?

Fidelity bonds cover employees against dishonest acts by employees.

With which standard, the auditor's substantive procedures must include reconciling the financial statements to the accounting records and should include examining material adjustments made during the course of preparing the financial statements.

The entity transferring the risk is called the ceding entity and the entity to which the risk is transferred is called the assuming entity.

Dollar rolls differ from regular repurchase agreements due to which of the following characteristics in the securities sold and repurchased.

___________ is an amount of money, loaned at interest for a specified term, secured by real estate and by its improvements such as buildings and infrastructure. This form of instrument itself varies by jurisdiction, but the debt is always evidenced by an accompanying promissory note.

Coverage of risks that do not fit normal underwriting patterns and that are not commensurate with standard rates is normally refers to as:

What is considered "pure" mortality protection?