AFSB 152 THE INSTITUTES ACTUAL EXAM
PAPER 2026 COMPLETE QUESTIONS AND
CORRECT ANSWERS GRADED A+
⩥ Which one of the these groups, for the most part, serves the market for
fidelity and surety bonds in the United States?
Answer: Multiline property-casualty insurers
⩥ Sureties use what written document to authorize a producer to act as
the surety's agent in bond production?
Answer: A power of attorney
⩥ While suretyship and banking both use a prequalification process to
extend credit to their customers, suretyship is different from bank credit
in that
Answer: Suretyship guarantees performance as well as monetary
obligations.
⩥ Because most bonds are "joint and several liability" documents, the
obligee can recover losses from
Answer: The principal or the surety, or from both.
,⩥ A financial guarantee differs from performance and fidelity guarantees
because it requires honesty, the ability to perform the contract, and
Answer: The ability to pay money to meet the contractual obligation.
⩥ A legal remedy that a surety can use against a defaulting bond
principal, in which the surety exercises its right to force the principal to
perform by exhausting the principal's resources instead of its own, is
Answer: Exoneration
⩥ In an unlimited cosurety arrangement, the obligee can collect
Answer: The full loss from any of the cosureties up to the penal sum of
the bond.
⩥ A bond that guarantees that faulty work will be corrected and
defective materials will be replaced for a period of one year or less and
that is usually provided with a performance bond at no additional cost is
a
Answer: Maintenance bond
⩥ A contract bond that guarantees the local governmental authority that
a principal will complete a development in accordance with approved
proposals and at the principal's expense is a
Answer: Subdivision bond
,⩥ This classification of license and permit bonds poses the least risk to
the surety and guarantees that the principal will conform with laws that
govern the business or activity it conducts.
Which bond classification is described?
Answer: Compliance-only bonds
⩥ Under a public official bond guaranteeing the honesty of a treasurer,
Answer: He or she must account for the cash that he or she holds while
in office.
⩥ Bond losses occur when a fiduciary and its surety are held
accountable because the fiduciary did not exercise reasonable care in
notifying all heirs of an impending probate proceeding. This fiduciary is
called
Answer: An administrator
⩥ A person who commences an action against another to obtain an
equitable remedy may be required to post a bond before the court will
proceed with the action. This bond is called
Answer: A plaintiff bond
⩥ The legally mandated hazardous waste facilities performance bond
, Answer: Can be posted only for hazardous waste facilities with permits,
and it requires an underwriting review of the closure plan.
⩥ The principal on a hazardous waste bond
Answer: Is an owner or operator of a hazardous waste facility and is
responsible for closure and postclosure care of the facility.
⩥ In the next step of the bond prequalification process, once the
producer has compiled the contractor's financial documents showing
significant liquidity,
Answer: The producer may facilitate underwriter interviews to help
determine the contractor's experience in meeting past contractual
obligations.
⩥ A contractor's percentage-of-completion estimates
Answer: Are based on the contractor's ability to estimate the cost to
complete the project and recognize income and profit as they accrue
during the project.
⩥ A $5 million/$20 million contract surety credit line means that the
surety is willing to
Answer: Bond single jobs up to a contract price of $5 million when the
aggregate contract backlog does not exceed $20 million.
PAPER 2026 COMPLETE QUESTIONS AND
CORRECT ANSWERS GRADED A+
⩥ Which one of the these groups, for the most part, serves the market for
fidelity and surety bonds in the United States?
Answer: Multiline property-casualty insurers
⩥ Sureties use what written document to authorize a producer to act as
the surety's agent in bond production?
Answer: A power of attorney
⩥ While suretyship and banking both use a prequalification process to
extend credit to their customers, suretyship is different from bank credit
in that
Answer: Suretyship guarantees performance as well as monetary
obligations.
⩥ Because most bonds are "joint and several liability" documents, the
obligee can recover losses from
Answer: The principal or the surety, or from both.
,⩥ A financial guarantee differs from performance and fidelity guarantees
because it requires honesty, the ability to perform the contract, and
Answer: The ability to pay money to meet the contractual obligation.
⩥ A legal remedy that a surety can use against a defaulting bond
principal, in which the surety exercises its right to force the principal to
perform by exhausting the principal's resources instead of its own, is
Answer: Exoneration
⩥ In an unlimited cosurety arrangement, the obligee can collect
Answer: The full loss from any of the cosureties up to the penal sum of
the bond.
⩥ A bond that guarantees that faulty work will be corrected and
defective materials will be replaced for a period of one year or less and
that is usually provided with a performance bond at no additional cost is
a
Answer: Maintenance bond
⩥ A contract bond that guarantees the local governmental authority that
a principal will complete a development in accordance with approved
proposals and at the principal's expense is a
Answer: Subdivision bond
,⩥ This classification of license and permit bonds poses the least risk to
the surety and guarantees that the principal will conform with laws that
govern the business or activity it conducts.
Which bond classification is described?
Answer: Compliance-only bonds
⩥ Under a public official bond guaranteeing the honesty of a treasurer,
Answer: He or she must account for the cash that he or she holds while
in office.
⩥ Bond losses occur when a fiduciary and its surety are held
accountable because the fiduciary did not exercise reasonable care in
notifying all heirs of an impending probate proceeding. This fiduciary is
called
Answer: An administrator
⩥ A person who commences an action against another to obtain an
equitable remedy may be required to post a bond before the court will
proceed with the action. This bond is called
Answer: A plaintiff bond
⩥ The legally mandated hazardous waste facilities performance bond
, Answer: Can be posted only for hazardous waste facilities with permits,
and it requires an underwriting review of the closure plan.
⩥ The principal on a hazardous waste bond
Answer: Is an owner or operator of a hazardous waste facility and is
responsible for closure and postclosure care of the facility.
⩥ In the next step of the bond prequalification process, once the
producer has compiled the contractor's financial documents showing
significant liquidity,
Answer: The producer may facilitate underwriter interviews to help
determine the contractor's experience in meeting past contractual
obligations.
⩥ A contractor's percentage-of-completion estimates
Answer: Are based on the contractor's ability to estimate the cost to
complete the project and recognize income and profit as they accrue
during the project.
⩥ A $5 million/$20 million contract surety credit line means that the
surety is willing to
Answer: Bond single jobs up to a contract price of $5 million when the
aggregate contract backlog does not exceed $20 million.
