AFSB 151 Ch. 2 Practice Exam|Questions with
100% Correct Answers
When selecting a surety company for a bonding relationship with a contractor,
The producer should consider the surety's suitability factors to the contractor's needs, including the
surety's philosophies, financial capacity, stability, and comfort with the projects
Johnson Construction was approved for a $5 million/$20 million annual contract surety credit. A $5
million/$20 million contract surety credit line means that the surety is willing to
Bond single jobs up to a contract price of $5 million when the aggregate contract backlog does not
exceed $20 million
A surety bond credit line covers the contractor's normal, anticipated bond needs. If a special situation
develops that would cause a contractor to exceed the credit line, then
The contractor and the producer should discuss the merits of the case with the underwriter to
determine the desirability of an increased credit line.
As a surety producer, Beth has developed a favorable percentage of the local bond market and has
earned a reputation among local contractors for professional-quality service. She has established
which one of the following?
Position
Which one of the following is a factor of marketing that requires the surety producer to have
education, training, knowledge, skill, and organization to provide professional service that clients
need?
Product
Which one of these categories of court bonds is underwritten on the basis of the principal's financial
capacity?
Judicial bonds
According to the law, companies that write credit enhancement financial guarantees
Cannot write any other type of insurance within that company
A contractor's percentage-of-completion estimates
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 pre-set surety bond credit limit
Eliminates the need to reevaluate the contractor's need for every bond.
Which one of the following statements regarding a surety's capacity is true?
If a contractor appears to be outgrowing the surety's capacity, the producer should arrange a backup
surety with adequate capacity to replace the first surety before reaching capacity
The most effective and credible form of promotion for surety producers is
Word-of-mouth advertising and referrals from the producer's satisfied clients
100% Correct Answers
When selecting a surety company for a bonding relationship with a contractor,
The producer should consider the surety's suitability factors to the contractor's needs, including the
surety's philosophies, financial capacity, stability, and comfort with the projects
Johnson Construction was approved for a $5 million/$20 million annual contract surety credit. A $5
million/$20 million contract surety credit line means that the surety is willing to
Bond single jobs up to a contract price of $5 million when the aggregate contract backlog does not
exceed $20 million
A surety bond credit line covers the contractor's normal, anticipated bond needs. If a special situation
develops that would cause a contractor to exceed the credit line, then
The contractor and the producer should discuss the merits of the case with the underwriter to
determine the desirability of an increased credit line.
As a surety producer, Beth has developed a favorable percentage of the local bond market and has
earned a reputation among local contractors for professional-quality service. She has established
which one of the following?
Position
Which one of the following is a factor of marketing that requires the surety producer to have
education, training, knowledge, skill, and organization to provide professional service that clients
need?
Product
Which one of these categories of court bonds is underwritten on the basis of the principal's financial
capacity?
Judicial bonds
According to the law, companies that write credit enhancement financial guarantees
Cannot write any other type of insurance within that company
A contractor's percentage-of-completion estimates
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 pre-set surety bond credit limit
Eliminates the need to reevaluate the contractor's need for every bond.
Which one of the following statements regarding a surety's capacity is true?
If a contractor appears to be outgrowing the surety's capacity, the producer should arrange a backup
surety with adequate capacity to replace the first surety before reaching capacity
The most effective and credible form of promotion for surety producers is
Word-of-mouth advertising and referrals from the producer's satisfied clients
