CPCU 520 LATEST 2026 STUDY GUIDE QUESTIONS AND
ANSWERS GUARANTEE A+
✔✔Using trend analysis, an underwriter calculates the percentage change in certain
items over time. If ABC Company's sales increased from $20 million in 20X5 to $35
million in 20X6, what is the percentage change?
A. 18%
B. 34%
C. 43%
D. 75% - ✔✔D.
75%
✔✔Which one of the following statements about the reunderwriting process is true?
A. The process is circular and begins and ends with monitoring activities.
B. Although called a "process," there are no defined steps that are followed when
reunderwriting.
C. The process is used to determine if an insurer is maximizing its investment income.
D. The process is linear and can only be applied at the end of the calendar year. - ✔✔A.
The process is used to analyze characteristics of policies in a book of business and the
trends in the characteristics.
✔✔Owners' equity represents the capital contributed by an organization's owners plus
the organization's
A. Treasury stock.
B. Net worth.
C. Retained earnings.
D. Net assets. - ✔✔C. Owners' equity represents the financing provided by an
organization's owners in addition to any earnings it retains. In corporations, owners'
equity may also be called shareholders' equity, or less precisely, net worth.
✔✔Which one of the following types of analysis helps an underwriter identify abnormal
values reported by an organization?
A. Trend Analysis
B. Ratio analysis
C. Vertical analysis
D. Historical analysis - ✔✔C.
Vertical analysis helps an underwriter identify abnormal values reported by an
organization.
✔✔Which one of the following will draft a manuscript policy or endorsement that is
worded to address the specific needs of the insured?
A. Field underwriter
B. Underwriting supervisor
C. Corporate underwriter
D. Producer - ✔✔C.
, The corporate underwriter will draft a manuscript policy or endorsement that is worded
to address the specific needs of the insured.
✔✔Which one of the following describes a section of the statement of cash flows?
A. Cash flows from operating activities
B. Cash flows from premium activities
C. Cash flows from sales activities
D. Cash flows from income activities - ✔✔A.
The statement of cash flows summarizes how cash flows into and out of an
organization's accounts. This statement is divided into three areas: cash from
operations, cash from investments, and cash from financing.
✔✔The most important thing a field underwriter does is
A. Evaluating new submissions and renewal underwriting.
B. Conducting education and training.
C. Managing the risk selection process.
D. Securing and maintaining treaty reinsurance. - ✔✔A.
The focus of a field underwriter is evaluating new submissions and renewal
underwriting.
✔✔Which one of the following is a major purpose of the statement of cash flows?
A. It is used to assess the ability to meet financial obligations.
B. It is used by insurance producers to balance daily bank deposits.
C. It is used in the cash allocation process by line managers.
D. It is used by middle management to assess future resource needs. - ✔✔A.
It is used to determine an organizations ability to generate positive cash flows, its ability
to meet financial obligations, and its need for additional financing. It is also used to
determine the reasons for any differences between net income and associated cash
receipts and disbursements.
✔✔Common size statements are frequently used during vertical analysis. Which one of
the following is true regarding common size statements?
A. Common size statements are not able to account for inflation when analyzing figures
over time.
B. Common size statements can be used to show percentage increases or decreases in
figures over time.
C. Common size statements are good for inter-company comparisons because they
correct for differences in company size.
D. Common size statements typically use a competitor's or industry average as the
base amount for percentage calculations. - ✔✔C.
Common size statements are good for inter-company comparisons because they
correct for differences in company size.
ANSWERS GUARANTEE A+
✔✔Using trend analysis, an underwriter calculates the percentage change in certain
items over time. If ABC Company's sales increased from $20 million in 20X5 to $35
million in 20X6, what is the percentage change?
A. 18%
B. 34%
C. 43%
D. 75% - ✔✔D.
75%
✔✔Which one of the following statements about the reunderwriting process is true?
A. The process is circular and begins and ends with monitoring activities.
B. Although called a "process," there are no defined steps that are followed when
reunderwriting.
C. The process is used to determine if an insurer is maximizing its investment income.
D. The process is linear and can only be applied at the end of the calendar year. - ✔✔A.
The process is used to analyze characteristics of policies in a book of business and the
trends in the characteristics.
✔✔Owners' equity represents the capital contributed by an organization's owners plus
the organization's
A. Treasury stock.
B. Net worth.
C. Retained earnings.
D. Net assets. - ✔✔C. Owners' equity represents the financing provided by an
organization's owners in addition to any earnings it retains. In corporations, owners'
equity may also be called shareholders' equity, or less precisely, net worth.
✔✔Which one of the following types of analysis helps an underwriter identify abnormal
values reported by an organization?
A. Trend Analysis
B. Ratio analysis
C. Vertical analysis
D. Historical analysis - ✔✔C.
Vertical analysis helps an underwriter identify abnormal values reported by an
organization.
✔✔Which one of the following will draft a manuscript policy or endorsement that is
worded to address the specific needs of the insured?
A. Field underwriter
B. Underwriting supervisor
C. Corporate underwriter
D. Producer - ✔✔C.
, The corporate underwriter will draft a manuscript policy or endorsement that is worded
to address the specific needs of the insured.
✔✔Which one of the following describes a section of the statement of cash flows?
A. Cash flows from operating activities
B. Cash flows from premium activities
C. Cash flows from sales activities
D. Cash flows from income activities - ✔✔A.
The statement of cash flows summarizes how cash flows into and out of an
organization's accounts. This statement is divided into three areas: cash from
operations, cash from investments, and cash from financing.
✔✔The most important thing a field underwriter does is
A. Evaluating new submissions and renewal underwriting.
B. Conducting education and training.
C. Managing the risk selection process.
D. Securing and maintaining treaty reinsurance. - ✔✔A.
The focus of a field underwriter is evaluating new submissions and renewal
underwriting.
✔✔Which one of the following is a major purpose of the statement of cash flows?
A. It is used to assess the ability to meet financial obligations.
B. It is used by insurance producers to balance daily bank deposits.
C. It is used in the cash allocation process by line managers.
D. It is used by middle management to assess future resource needs. - ✔✔A.
It is used to determine an organizations ability to generate positive cash flows, its ability
to meet financial obligations, and its need for additional financing. It is also used to
determine the reasons for any differences between net income and associated cash
receipts and disbursements.
✔✔Common size statements are frequently used during vertical analysis. Which one of
the following is true regarding common size statements?
A. Common size statements are not able to account for inflation when analyzing figures
over time.
B. Common size statements can be used to show percentage increases or decreases in
figures over time.
C. Common size statements are good for inter-company comparisons because they
correct for differences in company size.
D. Common size statements typically use a competitor's or industry average as the
base amount for percentage calculations. - ✔✔C.
Common size statements are good for inter-company comparisons because they
correct for differences in company size.
