Question 1

Which are the types of misstatements relevant to the auditor's consideration of fraud in a financial statement audit?

Accepted Answer

A)  misstatements arising from fraudulent financial reporting 
B)  misstatements arising from misappropriations of assets 
C)  Both A & B 
D)  Neither A nor B

Question 2

In case of supplementary contracts, the amount of each payment is computed on the basis of the assumed (or guaranteed) interest rate and the number and frequency of payments selected. For example:

Accepted Answer

A)  The higher the assumed interest rate, the larger the amount of each payment 
B)  The lower the assumed interest rate, the larger the amount of each payment 
C)  The higher the assumed interest rate, the smaller the amount of each payment 
D)  The higher the actual interest rate, the larger the amount of each payment

Question 3

What are especially effective in investment strategy, because of the powerful risk management attributes they provide?

Accepted Answer

A)  Investments trials 
B)  Product design 
C)  Communication benefits 
D)  Derivative instruments

Question 4

Which of the following is NOT the step of the transaction cycle?

Accepted Answer

A)  Evaluating and accepting expenses 
B)  Issuing policies 
C)  Billing and collecting premiums 
D)  Home office and branch office recordkeeping

Question 5

With the advent of adjustable rate mortgages, amortization schedules are adjusted periodically as dictated by the terms of the loan agreement. A _____________file is used to indicate when to adjust the rate. Most computer software systems can adjust amortization schedules by reminding the company of change dates, accept current rate adjustments, and to produce new schedules.

Accepted Answer

A)  Automated software 
B)  Tickler or reminder 
C)  Emergency 
D)  Excel

Question 6

In processing ______________, many entities keep a single file for each insured event, with separate identification of each claimant.

Accepted Answer

A)  Insurance claim 
B)  transaction cycle 
C)  Liability claim 
D)  Compensation period

Question 7

What usually features a fixed premium that acts to levelize the policyholder's outlay over the lifetime of the policy?

Accepted Answer

A)  Whole life insurance 
B)  Permanent life insurance 
C)  Fiscally examined insurance 
D)  Life time insurance

Question 8

A Company's investments are admitted assets properly valued which support the reserves and liabilities, including required capital and surplus. Many jurisdictions permit companies to make some investments that do not meet all of the strict regulatory requirements. These additional investments are often referred to as basket assets. Which of the following is/are true for Basket assets?

Accepted Answer

A)  They have been made out of a company's free surplus 
B)  Mortgage loans are first liens on the property backing them. Second or third-lien mortgages typically qualify as "basket" loans 
C)  A particular entity can obtain this benefit 
D)  They record investment and number of mortgages on which interest has been reduced, and the percent the interest was reduced

Question 9

The method used to account for insurance and reinsurance contracts that do not transfer insurance risk is referred to as:

Accepted Answer

A)  Accounted revenue 
B)  Premium deficiency 
C)  Retained balance 
D)  Deposit accounting

Question 10

Cash does include funds in transit, unless the deposit was prepared and sent to the bank. If the deposit was sent to the bank, it is considered cash and entered into the company's books and is no longer in transit. Funds in transit not yet sent to the bank are entered:

Accepted Answer

A)  On a write-in line on the Assets page 
B)  As a prepaid asset on the Assets page 
C)  As a long term asset on the Assets page 
D)  As a non-admitted asset on Asset page

Question 11

There are many different sources of CMBS. Conduits and aggregate pools generally consist of loans newly originated, purchased or held by investment bankers until the pool is large enough for an efficient execution. Government agencies such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corp. (FHLMC) are important sources of:

Accepted Answer

A)  Residential financing 
B)  B2B financing. 
C)  Commercial financing. 
D)  Mortgage loans

Question 12

The two major asset classes in which life insurers invest are:

Accepted Answer

A)  annuities and bonds 
B)  mortgages and annuities 
C)  bonds and investments 
D)  bonds and mortgages

Question 13

The magnitude of the variable annuity benefits provided by a deferred annuity depends on the size of the account value at the end of the accumulation phase.

Accepted Answer

A) True 
 B)False

Question 14

Permanent stockholders' equity represents an outside claim (from the permanent stockholders' perspective) on the net assets of a subsidiary.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is NOT of equity market sensitivities that are usually considered in dynamic hedging?

Accepted Answer

A)  Delta 
B)  Vega 
C)  theta 
D)  alpha

Question 16

An estimate due to time lags in the receipt of reports from cendants is called reinsurance.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is NOT included when initial acquisition of Subsidiary, Controlled and Affiliated Entities (SCA) is recorded as the sum of?

Accepted Answer

A)  any cash payment 
B)  the fair value of other assets distributed 
C)  the fair value of any expenses 
D)  any direct costs of the acquisition

Question 18

In which of the following, Internal entity experience or information from published sources concerning recent trends in socioeconomic factors affecting claim payments:

Accepted Answer

A)  general inflation rates 
B)  judicial decisions assessing liability 
C)  judicial decisions regarding noneconomic damages 
D)  All of the above

Question 19

_______________ reserves for income tax purposes are referred to as maximum tax actuarial reserves (MTAR) and replace the actuarial liabilities used for accounting purposes in computing taxable income.

Accepted Answer

A)  Procedure-related 
B)  Policy-related 
C)  Standardized- related act 
D)  None of the above

Question 20

Interest rates are a key element of any option pricing exercise because cash flows are discounted at interest.

Accepted Answer

A) True 
 B)False

Exam 1: Accredited Financial Examiner

Which are the types of misstatements relevant to the auditor's consideration of fraud in a financial statement audit?

In case of supplementary contracts, the amount of each payment is computed on the basis of the assumed (or guaranteed) interest rate and the number and frequency of payments selected. For example:

What are especially effective in investment strategy, because of the powerful risk management attributes they provide?

Which of the following is NOT the step of the transaction cycle?

In processing ______________, many entities keep a single file for each insured event, with separate identification of each claimant.

What usually features a fixed premium that acts to levelize the policyholder's outlay over the lifetime of the policy?

The method used to account for insurance and reinsurance contracts that do not transfer insurance risk is referred to as:

Cash does include funds in transit, unless the deposit was prepared and sent to the bank. If the deposit was sent to the bank, it is considered cash and entered into the company's books and is no longer in transit. Funds in transit not yet sent to the bank are entered:

The two major asset classes in which life insurers invest are:

The magnitude of the variable annuity benefits provided by a deferred annuity depends on the size of the account value at the end of the accumulation phase.

Permanent stockholders' equity represents an outside claim (from the permanent stockholders' perspective) on the net assets of a subsidiary.

Which of the following is NOT of equity market sensitivities that are usually considered in dynamic hedging?

An estimate due to time lags in the receipt of reports from cendants is called reinsurance.

Which of the following is NOT included when initial acquisition of Subsidiary, Controlled and Affiliated Entities (SCA) is recorded as the sum of?

In which of the following, Internal entity experience or information from published sources concerning recent trends in socioeconomic factors affecting claim payments:

_______________ reserves for income tax purposes are referred to as maximum tax actuarial reserves (MTAR) and replace the actuarial liabilities used for accounting purposes in computing taxable income.

Interest rates are a key element of any option pricing exercise because cash flows are discounted at interest.