AFSB 151 Exam |Complete Questions with A+
Graded Answers
Which one of the following characteristics is unique under American personal suretyship compared
with corporate suretyship?
A. Sureties were protected by laws that were favorable to them.
B. This form of suretyship was subject to statutory law.
C. This form of suretyship was subject to common law.Incorrect. Under American personal suretyship,
sureties were protected by laws that were favorable to them.
D. Surety bonds were required to be in writing
A) Sureties were protected by laws that were favorable to them
what are license and permit bonds?
Licenses help REGULATE LICENSE HOLDERS through statutes, and are backed by license and permit
bonds
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
A. Bond single jobs up to a contract price of $5 million when the aggregate contract backlog does not
exceed $20 million.
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
home office underwriting activities include
formulating underwriting policy
As a loss control practice concerning large public official bonds, a surety may ask for which one of the
following to confirm that the governmental body has established an approved list of banks?
Designation of depository
The bond guarantees that the car will remain in the same condition and will not be sold or otherwise
disposed of. Which one of the following types of bond was Keith required to obtain?
Replevin bond
Which one of the following special characteristics of fidelity bonds is described by the following
statement: The nature of the employment relationship provides the employee an opportunity to learn
the firm's routines; schedules; and the existence, absence, or relative effectiveness of management
controls.
property exposed to loss is accessible
what does the underwriter consider when evaluating CAPACITY for CONTINUITY PLANNING
continuity of management and continuity of ownership
, he wants to evaluate the degree of variability in contract volume, gross profits, overhead, and net
profit over a period of time. Which one of the following financial statements should Suzanne review?
income statement
The information that the surety underwriter organizes for the background investigation of a principal
includes
Public information, including the principal's legal filings, such as lawsuits, judgments, tax liens,
bankruptcies, reorganizations, and Uniform Commercial Code filings.
Which one of the following chapters of the Bankruptcy Reform Act allows small business owners to
repay creditors over a period of time and retain possession of their assets?
Chapter 13
It purchases goods for resale to third parties, and a bank finances the purchase price. The bank
secures the loan with a lien on the goods and, when each item is sold, Regina's Rugs pays the lender
the full amount due on that item.
a floor plan loan
Government contracting officers were monitoring C & C Surety's fees with regard to minority and
small business set-aside procurement programs. Which one of the following sections of the Consumer
Credit Protection Act could be used to prosecute C & C Surety if the fees are found to be in violation
of the act?
Title II
Which one of the following includes sections of the Consumer Credit Protection Act that apply directly
to the surety industry?
Titles VI and VII
Allied Insurer has a $450,000 xs $150,000 per risk excess of loss reinsurance treaty with Omega
Reinsurer. An insured with a limit of $1,000,000 sustains the following losses:
Loss 1:$125,000
Loss 2:$500,000
Loss 3:$850,000
How much will Omega Reinsurer pay for Loss 2?
Loss Amount - Amount per Risk Excess of Loss
500,000 - 150,000 = 350,000
Fidelity bond claims
Can expose an insurer to waiver of a condition precedent of bond contracts and DEFAMATION
ACTIONS, if they are not handled properly.
Which one of the following statements is true regarding options available to surety claims personnel
after a contract default occurs and the principal admits to it?
The surety can demand that the principal and indemnitors execute mortgages and securities in the
surety's favor and place them in a trust for any losses or expenses it sustains.
When a claim is pending on a cosurety bond
Graded Answers
Which one of the following characteristics is unique under American personal suretyship compared
with corporate suretyship?
A. Sureties were protected by laws that were favorable to them.
B. This form of suretyship was subject to statutory law.
C. This form of suretyship was subject to common law.Incorrect. Under American personal suretyship,
sureties were protected by laws that were favorable to them.
D. Surety bonds were required to be in writing
A) Sureties were protected by laws that were favorable to them
what are license and permit bonds?
Licenses help REGULATE LICENSE HOLDERS through statutes, and are backed by license and permit
bonds
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
A. Bond single jobs up to a contract price of $5 million when the aggregate contract backlog does not
exceed $20 million.
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
home office underwriting activities include
formulating underwriting policy
As a loss control practice concerning large public official bonds, a surety may ask for which one of the
following to confirm that the governmental body has established an approved list of banks?
Designation of depository
The bond guarantees that the car will remain in the same condition and will not be sold or otherwise
disposed of. Which one of the following types of bond was Keith required to obtain?
Replevin bond
Which one of the following special characteristics of fidelity bonds is described by the following
statement: The nature of the employment relationship provides the employee an opportunity to learn
the firm's routines; schedules; and the existence, absence, or relative effectiveness of management
controls.
property exposed to loss is accessible
what does the underwriter consider when evaluating CAPACITY for CONTINUITY PLANNING
continuity of management and continuity of ownership
, he wants to evaluate the degree of variability in contract volume, gross profits, overhead, and net
profit over a period of time. Which one of the following financial statements should Suzanne review?
income statement
The information that the surety underwriter organizes for the background investigation of a principal
includes
Public information, including the principal's legal filings, such as lawsuits, judgments, tax liens,
bankruptcies, reorganizations, and Uniform Commercial Code filings.
Which one of the following chapters of the Bankruptcy Reform Act allows small business owners to
repay creditors over a period of time and retain possession of their assets?
Chapter 13
It purchases goods for resale to third parties, and a bank finances the purchase price. The bank
secures the loan with a lien on the goods and, when each item is sold, Regina's Rugs pays the lender
the full amount due on that item.
a floor plan loan
Government contracting officers were monitoring C & C Surety's fees with regard to minority and
small business set-aside procurement programs. Which one of the following sections of the Consumer
Credit Protection Act could be used to prosecute C & C Surety if the fees are found to be in violation
of the act?
Title II
Which one of the following includes sections of the Consumer Credit Protection Act that apply directly
to the surety industry?
Titles VI and VII
Allied Insurer has a $450,000 xs $150,000 per risk excess of loss reinsurance treaty with Omega
Reinsurer. An insured with a limit of $1,000,000 sustains the following losses:
Loss 1:$125,000
Loss 2:$500,000
Loss 3:$850,000
How much will Omega Reinsurer pay for Loss 2?
Loss Amount - Amount per Risk Excess of Loss
500,000 - 150,000 = 350,000
Fidelity bond claims
Can expose an insurer to waiver of a condition precedent of bond contracts and DEFAMATION
ACTIONS, if they are not handled properly.
Which one of the following statements is true regarding options available to surety claims personnel
after a contract default occurs and the principal admits to it?
The surety can demand that the principal and indemnitors execute mortgages and securities in the
surety's favor and place them in a trust for any losses or expenses it sustains.
When a claim is pending on a cosurety bond
