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AU 60 FINAL EXAM 2026 100% PASS
ASSURED EXAMINATION SOLUTIONS
The common distinction between field
underwriters and corporate underwriters is
that line underwriters - correct answer-
Implement the steps in the underwriting
process. Corporate underwriters assist
underwriting management with formulating
underwriting policy.
Which one of the following statements is
correct with regard to regulation and
insurers' operations? - correct answer-
Solvency regulation indirectly influences
underwriting by limiting new business for
insurers.
Underwriting regulations seek to ensure
correct classification of insureds because -
correct answer- Misclassification can result
in inadequate premiums and drain an insurer's
surplus.
The primary benefit of using the services of
an independent contractor who specializes in
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risk control work to inspect properties,
rather than the insurer's risk control
representative? - correct answer- Quicker
response
John is a risk management specialist for XYZ
Company. John examines XYZ's financial
statements on a quarterly basis. Which one of
the following best describes a reason for this
analysis? - correct answer- A review of the
financial statements helps John to determine
XYZ's insurance needs.
Cost of goods sold appears on the income
statements of manufacturing and retail
entities. Which one of the following
statements best describes cost of goods sold -
correct answer- Cost of goods sold reports
expenses after an inventory item is sold.
Which one of the following types of analysis
helps an underwriter identify abnormal values
reported by an organization? - correct answer-
Vertical analysis
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Liquidity ratios are used to determine a
company's ability to pay off its short-term
debts. Typically, the higher the value of the
ratio, - correct answer- The larger the margin
of safety the company possesses to cover its
short-term debts.
Which one of the following ratios indicates
the adequacy of a company's working capital to
meet its current financial obligations? -
correct answer- Current ratio
The most recent financial statements for
Buddy's Burger Hut reveal the following:
Cash$50,000 Equipment$25,000 Inventory$15,000
Accounts Receivable$2,500 Cost of Goods
Sold$125,000 Marketable Securities$5,000
Current Liabilities$50,000
Based on this information, Buddy's Burger
Hut's Acid-Test Ratio is - correct answer-
Buddy's Burger Hut's Acid-Test Ratio is 1.15.
($50,000 + $5,000 + $2,500) / $50,000 = 1.15
An organization that considers both key
business risks and opportunities when
formulating its business strategies reflects
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its commitment to which one of the following?
- correct answer- Enterprise risk management
William is a plumber. He has a contract with a
home builder to install the bathrooms in a new
housing development. William will supply the
materials and equipment. He will be paid a
fixed fee per house and must complete the job
by an agreed deadline. Which one of the
following best describes William's
relationship to the home builder? - correct
answer- Subcontractor
Which one of the following sources of
underwriting information provides a hazard
index by line of insurance for the various
classifications? - correct answer- Best's
Underwriting Guide
Jackson is a commercial lines underwriter.
When evaluating an organization's location,
one of the factors that he considers is how
susceptible the organization is to social
inflation. Social inflation is typically of
greatest concern when underwriting which one
of the following lines of business? - correct
answer- Liability
AU 60 FINAL EXAM 2026 100% PASS
ASSURED EXAMINATION SOLUTIONS
The common distinction between field
underwriters and corporate underwriters is
that line underwriters - correct answer-
Implement the steps in the underwriting
process. Corporate underwriters assist
underwriting management with formulating
underwriting policy.
Which one of the following statements is
correct with regard to regulation and
insurers' operations? - correct answer-
Solvency regulation indirectly influences
underwriting by limiting new business for
insurers.
Underwriting regulations seek to ensure
correct classification of insureds because -
correct answer- Misclassification can result
in inadequate premiums and drain an insurer's
surplus.
The primary benefit of using the services of
an independent contractor who specializes in
,2 | Page
risk control work to inspect properties,
rather than the insurer's risk control
representative? - correct answer- Quicker
response
John is a risk management specialist for XYZ
Company. John examines XYZ's financial
statements on a quarterly basis. Which one of
the following best describes a reason for this
analysis? - correct answer- A review of the
financial statements helps John to determine
XYZ's insurance needs.
Cost of goods sold appears on the income
statements of manufacturing and retail
entities. Which one of the following
statements best describes cost of goods sold -
correct answer- Cost of goods sold reports
expenses after an inventory item is sold.
Which one of the following types of analysis
helps an underwriter identify abnormal values
reported by an organization? - correct answer-
Vertical analysis
,3 | Page
Liquidity ratios are used to determine a
company's ability to pay off its short-term
debts. Typically, the higher the value of the
ratio, - correct answer- The larger the margin
of safety the company possesses to cover its
short-term debts.
Which one of the following ratios indicates
the adequacy of a company's working capital to
meet its current financial obligations? -
correct answer- Current ratio
The most recent financial statements for
Buddy's Burger Hut reveal the following:
Cash$50,000 Equipment$25,000 Inventory$15,000
Accounts Receivable$2,500 Cost of Goods
Sold$125,000 Marketable Securities$5,000
Current Liabilities$50,000
Based on this information, Buddy's Burger
Hut's Acid-Test Ratio is - correct answer-
Buddy's Burger Hut's Acid-Test Ratio is 1.15.
($50,000 + $5,000 + $2,500) / $50,000 = 1.15
An organization that considers both key
business risks and opportunities when
formulating its business strategies reflects
, 4 | Page
its commitment to which one of the following?
- correct answer- Enterprise risk management
William is a plumber. He has a contract with a
home builder to install the bathrooms in a new
housing development. William will supply the
materials and equipment. He will be paid a
fixed fee per house and must complete the job
by an agreed deadline. Which one of the
following best describes William's
relationship to the home builder? - correct
answer- Subcontractor
Which one of the following sources of
underwriting information provides a hazard
index by line of insurance for the various
classifications? - correct answer- Best's
Underwriting Guide
Jackson is a commercial lines underwriter.
When evaluating an organization's location,
one of the factors that he considers is how
susceptible the organization is to social
inflation. Social inflation is typically of
greatest concern when underwriting which one
of the following lines of business? - correct
answer- Liability
