AFSB 151 Practice Exam|Questions with
100% Correct Answers
Large accounts should be monitored to ensure that when companies add subsidiaries or affiliates or
are acquired by new owners, the new parties sign a new indemnity agreement. Otherwise, if a claim
arises, the surety might have only which one of the following to fall back on?
Select one:
A. The bond form
B. The three-party surety agreement.
C. Its common-law rights
D. An obsolete indemnity agreement
C. Its common-law rights
The Barker Group hired Meyer Construction to build a new high-rise office building. As part of the
construction contract, Meyer Construction was required to secure a number of contract bonds
naming The Barker Group as the obligee. Which one of the following types of bond guarantees that
bills incurred by the contractor for labor and materials will be fully paid at the completion of the
project?
Select one:
A. Bid bond
B. Payment bond
C. Performance bond
D. Maintenance bond
B. Payment bond
Which one of the following statements is true regarding a surety producer's role in its performance of
credit analyses?
Select one:
A. Producers help contractors when they recommend a slightly larger credit line than the contractor's
experience and finances support, because it will enable the producer to grow its business.
B. The producer's credit analysis should be lengthy and contain full details on the contractor's history,
organization, management, performance, financial performance and condition, and related items.
C. The producer's credit analysis should include a recommendation of a "responsible" line of surety
credit and an appropriate work program to encourage the contractor's responsible growth.
D. Producers assist contractors and sureties when they recommend a credit line for a contractor that
is smaller than the contractor's experience and finances support because it reduces the chance of
bond default.
C. The producer's credit analysis should include a recommendation of a "responsible" line of surety
credit and an appropriate work program to encourage the contractor's responsible growth.
Lisa is a contract surety bond underwriter. After reviewing the work-on-hand report for one of the
contracting principals, she is concerned that the contractor has too much backlog relative to its
financial position. Lisa will likely do which one of the following until the contractor demonstrates that
the job programs as practically and financially feasible?
Select one:
A. Restrict future bidding for the contractor
B. Increase the contractor's line of credit
C. Forfeit existing bonds for the contractor
D. Reduce the contractor's line of credit
A. Restrict future bidding for the contractor
, Which one of the following statements regarding commercial transactions law is true?
Select one:
A. Under a UCC filing, the creditor having the first lien on security interests in property receives a pro
rata share of the proceeds from a sale before any other lien holders.
B. Under the UCC, a creditor receives a security interest in goods in return for granting credit to a
buyer.
C. All states have adopted the entire Uniform Commercial Code (UCC).
D. Under the UCC, a security interest in goods means that, if a buyer defaults on a loan, the creditor
can seize all of the buyer's property, sell it, and keep all profits.
B. Under the UCC, a creditor receives a security interest in goods in return for granting credit to a
buyer.
Allison was underwriting a new account that another surety previously bonded. She was concerned
that the contractor might have problems not readily apparent that might cause a potentially large
loss. Which one of the following facts might indicate that such a loss is a particularly relevant
concern?
Select one:
A. The contractor's prior surety refused to write a bond the contractor wanted.
B. The contractor had an uncooperative certified public accountant or banker.
C. The contractor had a personality conflict with the prior producer.
D. The contractor had a personality conflict with the prior surety.
A. The contractor's prior surety refused to write a bond the contractor wanted.
Which one of the following types of bond would make a surety liable for the difference between what
should have been collected and the amount that can be accounted for, even though a public official
might not have been dishonest?
Select one:
A. Fiduciary bond
B. Malfeasance bond
C. Faithful performance bond.
D. Collection bond
C. Faithful performance bond.
Bonds that are required by business entities and individuals to protect them from loss, and for which
the obligation is dictated by the contract between the principal and the obligee and by the bond
provisions, are
Select one:
A. Fiduciary bonds.
B. Commercial surety bonds.
C. Nonstatutory bonds.
D. Statutory bonds.
C. Nonstatutory bonds.
Sureties underwrite both attachment and replevin bonds similarly, but they usually write replevin
bonds
Select one:
100% Correct Answers
Large accounts should be monitored to ensure that when companies add subsidiaries or affiliates or
are acquired by new owners, the new parties sign a new indemnity agreement. Otherwise, if a claim
arises, the surety might have only which one of the following to fall back on?
Select one:
A. The bond form
B. The three-party surety agreement.
C. Its common-law rights
D. An obsolete indemnity agreement
C. Its common-law rights
The Barker Group hired Meyer Construction to build a new high-rise office building. As part of the
construction contract, Meyer Construction was required to secure a number of contract bonds
naming The Barker Group as the obligee. Which one of the following types of bond guarantees that
bills incurred by the contractor for labor and materials will be fully paid at the completion of the
project?
Select one:
A. Bid bond
B. Payment bond
C. Performance bond
D. Maintenance bond
B. Payment bond
Which one of the following statements is true regarding a surety producer's role in its performance of
credit analyses?
Select one:
A. Producers help contractors when they recommend a slightly larger credit line than the contractor's
experience and finances support, because it will enable the producer to grow its business.
B. The producer's credit analysis should be lengthy and contain full details on the contractor's history,
organization, management, performance, financial performance and condition, and related items.
C. The producer's credit analysis should include a recommendation of a "responsible" line of surety
credit and an appropriate work program to encourage the contractor's responsible growth.
D. Producers assist contractors and sureties when they recommend a credit line for a contractor that
is smaller than the contractor's experience and finances support because it reduces the chance of
bond default.
C. The producer's credit analysis should include a recommendation of a "responsible" line of surety
credit and an appropriate work program to encourage the contractor's responsible growth.
Lisa is a contract surety bond underwriter. After reviewing the work-on-hand report for one of the
contracting principals, she is concerned that the contractor has too much backlog relative to its
financial position. Lisa will likely do which one of the following until the contractor demonstrates that
the job programs as practically and financially feasible?
Select one:
A. Restrict future bidding for the contractor
B. Increase the contractor's line of credit
C. Forfeit existing bonds for the contractor
D. Reduce the contractor's line of credit
A. Restrict future bidding for the contractor
, Which one of the following statements regarding commercial transactions law is true?
Select one:
A. Under a UCC filing, the creditor having the first lien on security interests in property receives a pro
rata share of the proceeds from a sale before any other lien holders.
B. Under the UCC, a creditor receives a security interest in goods in return for granting credit to a
buyer.
C. All states have adopted the entire Uniform Commercial Code (UCC).
D. Under the UCC, a security interest in goods means that, if a buyer defaults on a loan, the creditor
can seize all of the buyer's property, sell it, and keep all profits.
B. Under the UCC, a creditor receives a security interest in goods in return for granting credit to a
buyer.
Allison was underwriting a new account that another surety previously bonded. She was concerned
that the contractor might have problems not readily apparent that might cause a potentially large
loss. Which one of the following facts might indicate that such a loss is a particularly relevant
concern?
Select one:
A. The contractor's prior surety refused to write a bond the contractor wanted.
B. The contractor had an uncooperative certified public accountant or banker.
C. The contractor had a personality conflict with the prior producer.
D. The contractor had a personality conflict with the prior surety.
A. The contractor's prior surety refused to write a bond the contractor wanted.
Which one of the following types of bond would make a surety liable for the difference between what
should have been collected and the amount that can be accounted for, even though a public official
might not have been dishonest?
Select one:
A. Fiduciary bond
B. Malfeasance bond
C. Faithful performance bond.
D. Collection bond
C. Faithful performance bond.
Bonds that are required by business entities and individuals to protect them from loss, and for which
the obligation is dictated by the contract between the principal and the obligee and by the bond
provisions, are
Select one:
A. Fiduciary bonds.
B. Commercial surety bonds.
C. Nonstatutory bonds.
D. Statutory bonds.
C. Nonstatutory bonds.
Sureties underwrite both attachment and replevin bonds similarly, but they usually write replevin
bonds
Select one:
