AFSB 151 Practice Exam Q's|Complete with
A+ Graded Answers
A type of reinsurance transaction that involves an agreement between the primary insurer and the
reinsurer specifying how to transfer risks, that defines the eligible risks in terms of lines and classes of
business, that specifies the parties' obligations, and for which eligible risks are automatically
reinsured, is
Treaty reinsurance
A surety's liability for a surety bond can only cease to exist when the underlying obligation/agreement
has
been performed as specified in the contract or when the bond has been canceled
An organization that uses its collected data to calculate loss costs that member company underwriters
use to determine premiums for risks is
The SFAA
If the bond applicant is a business entity, from what parties do corporate sureties routinely require
indemnity agreements?
any persons who have major financial interests in the entity
he surety bond three-party relationship, the party who guarantees fulfillment of the obligation and
who will either perform the obligation or pay the costs for its fulfillment is the?
READ the question fully
surety
Suretyship and insurance are alike in that
Insurance commissioners regulate both.
When evaluating a surety claim, claims representatives are often assisted by outside legal counsel.
What other professionals assist claims representatives?
engineers
Following the Civil War, the growing number and complexity of financial/commercial relationships led
to the need for
commercial suretyship
Designated depositories are banks approved by
A government entity and in which the official or employee should deposit public funds
Which one of these statements is true regarding financial guaranty bonds?
When in place, the entire issue of these bonds would have a higher investment grade, allowing
municipalities to sell their bonds at a lower interest rate.
What type of miscellaneous bond do sureties often write as open penalty forms to provide for
fluctuation of the value of the subject of the bond?
, A lost security bond
The legally mandated hazardous waste facilities performance bond
Can be posted only for hazardous waste facilities with permits, and it requires an underwriting review
of the closure plan.
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
a plaintiff bond
One type of fiduciary bond is required of an individual who has the legal responsibility for the care of
a minor or a legally incompetent person or for such a person's property. This bond is called
A guardians bond.
In this public official category of bonds, sureties pay losses when subordinates in the principal's office
cause them, as well as when the principal causes them. This described category of bonds
Is officials who handle public funds, and the principals are charged with honesty and faithful
performance of duty while handling money as required by law
Under a public official bond guaranteeing the honesty of a treasurer
He or she must account for the cash that he or she holds while in office.
Public official bonds for officials who handle public funds
Guarantee losses that occur when the principal fails to follow designated depository guidelines.
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
Nonstatutory bonds
Which one of the these groups, for the most part, serves the market for fidelity and surety bonds in
the United States?
Multiline property-casualty insurers
Which one of the following developed in the United States to guarantee the large amounts of money
involved in the country's industrial and commercial growth?
corporate suretyship
Which one of these is an accurate comparison of suretyship and banking?
Both suretyship and banking are financial relationships and deal with losses that are generally defined
in monetary terms; however, a surety guarantees more than just an extension of credit.
A surety that is not satisfied with the principal's financial capacity, past experience, and resources
other than money will probably
Provide the bond subject to additional considerations and bond requirements
A+ Graded Answers
A type of reinsurance transaction that involves an agreement between the primary insurer and the
reinsurer specifying how to transfer risks, that defines the eligible risks in terms of lines and classes of
business, that specifies the parties' obligations, and for which eligible risks are automatically
reinsured, is
Treaty reinsurance
A surety's liability for a surety bond can only cease to exist when the underlying obligation/agreement
has
been performed as specified in the contract or when the bond has been canceled
An organization that uses its collected data to calculate loss costs that member company underwriters
use to determine premiums for risks is
The SFAA
If the bond applicant is a business entity, from what parties do corporate sureties routinely require
indemnity agreements?
any persons who have major financial interests in the entity
he surety bond three-party relationship, the party who guarantees fulfillment of the obligation and
who will either perform the obligation or pay the costs for its fulfillment is the?
READ the question fully
surety
Suretyship and insurance are alike in that
Insurance commissioners regulate both.
When evaluating a surety claim, claims representatives are often assisted by outside legal counsel.
What other professionals assist claims representatives?
engineers
Following the Civil War, the growing number and complexity of financial/commercial relationships led
to the need for
commercial suretyship
Designated depositories are banks approved by
A government entity and in which the official or employee should deposit public funds
Which one of these statements is true regarding financial guaranty bonds?
When in place, the entire issue of these bonds would have a higher investment grade, allowing
municipalities to sell their bonds at a lower interest rate.
What type of miscellaneous bond do sureties often write as open penalty forms to provide for
fluctuation of the value of the subject of the bond?
, A lost security bond
The legally mandated hazardous waste facilities performance bond
Can be posted only for hazardous waste facilities with permits, and it requires an underwriting review
of the closure plan.
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
a plaintiff bond
One type of fiduciary bond is required of an individual who has the legal responsibility for the care of
a minor or a legally incompetent person or for such a person's property. This bond is called
A guardians bond.
In this public official category of bonds, sureties pay losses when subordinates in the principal's office
cause them, as well as when the principal causes them. This described category of bonds
Is officials who handle public funds, and the principals are charged with honesty and faithful
performance of duty while handling money as required by law
Under a public official bond guaranteeing the honesty of a treasurer
He or she must account for the cash that he or she holds while in office.
Public official bonds for officials who handle public funds
Guarantee losses that occur when the principal fails to follow designated depository guidelines.
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
Nonstatutory bonds
Which one of the these groups, for the most part, serves the market for fidelity and surety bonds in
the United States?
Multiline property-casualty insurers
Which one of the following developed in the United States to guarantee the large amounts of money
involved in the country's industrial and commercial growth?
corporate suretyship
Which one of these is an accurate comparison of suretyship and banking?
Both suretyship and banking are financial relationships and deal with losses that are generally defined
in monetary terms; however, a surety guarantees more than just an extension of credit.
A surety that is not satisfied with the principal's financial capacity, past experience, and resources
other than money will probably
Provide the bond subject to additional considerations and bond requirements
