AFSB 151 Practice Exam Questions With
100% Correct Answers.
Which one of the following characteristics is unique under American personal suretyship compared
with corporate suretyship?
Sureties were protected by laws that were favorable to them
Except in the case of a forfeiture bond, if the principal defaults the surety will pay
Up to the bond penalty, but no more than the obligee's actual loss amount
CB Construction entered into a construction contract with Lee Properties. The contract required that
CB Construction obtain a performance bond, with Lee Properties named as the obligee. Performance
bonds guarantee that the obligee will be indemnified for any loss resulting from the principal's failure
to perform the work
According to the contract, plans, and specifications; at the agreed price; and within the time allowed
Which of the following 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 is an example of a third-party beneficiary on a given bond?
An heir on a fiduciary executory bond
Bonds under this classification guarantee that the principal will properly account for and remit
government funds collected as required. Which license and permit bond classification is described?
Tax or fee bonds
The two basic types of surety bonds that are written today are
Contract surety bonds and commercial surety bonds
A basic type of bond that involves all situations in which sureties guarantee performance of
obligations that generally do not arise from contract is
Commercial surety bonds
When evaluating a surety claim, claims representatives are often assisted by outside legal counsel.
Which one of the following other professionals often assist claims representatives?
Engineers
The 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
Surety
Paul has the legal responsibility for the care for his brother, who is a legally incompetent person, and
for his brother's property. Paul is required to obtain a bond that guarantees he will exercise his duties
faithfully and account for all property received. This bond is called
A fiduciary bond
,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
Bonds for which the laws specify the bond conditions and for which all three parties are dictated by
the applicable law rather than the bond provisions are
Statutory bonds
A surety bond is a written document in which one party guarantees a second party's
Performance to a third party for the second party's failure to fulfill an obligation
Unless the cosureties limit their respective liabilities in a bond, when two or more cosureties execute
a bond with the same principal, their liability to the obligee is
Joint and several
A group that educates the general public, legislative bodies, contractor associations, and others about
the benefits of surety bonds is
The National Association of Surety Bond Producers (NASBP)
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
Because most bonds are "joint and several liability" documents, the obligee can recover losses from
The principal or the surety, or from both
The Miller Act was passed to require principals, in addition to furnishing a performance bond, to
furnish a separate payment bond guaranteeing payment of all bills incurred by the contractor
For labor and materials at the project completion for all federal jobs
Judicial bonds
Are a category of court bonds that arise out of litigation and are posted by persons seeking or
appealing a remedy in court
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
An administrator
In accordance with a contract to build a county shed for the Village of Malcolm, Raymone
Construction purchases a contract surety bond from SureRite Insurance. Identify the principal,
obligee, and surety in this suretyship.
Principal- Raymone Construction; obligee- Village of Malcolm; Surety- SureRite Insurance
In an unlimited cosurety arrangement, the obligee can collect
, The full loss from any of the cosureties up to the penal sum of the bond
WP Hospitality hired Green Builders to build a new hotel. As part of the contract, WP Hospitality
required that Green Builders obtain a surety bond to guarantee that it would pay all subcontractors
for their labor and materials. The payment bond was obtained from Blue Surety. Which one of the
following is a potential third-party beneficiary in this surety relationship?
Subcontractors
Under a bid bond, if the bid is accepted and the principal refuses to enter into the contract or fails to
provide the additional required bonds, subject to the penal amount of the bond, the obligee is
generally entitled to be paid
The difference between the amount of the principal's bid and the next lowest bid the obligee finally
accepts
Public official bonds are written for principals who have administrative duties but do not handle
money and who
Include commissioners, assessors, judges, coroners, town clerks, engineers, and auditors
Ellen was planning a large family reunion at a local park. She wanted to reserve the picnic tables, and
have use of the restrooms at the park. As a prerequisite to using the park, the township required that
Ellen obtain a commercial surety bond. Which one of the following types of surety bonds would Ellen
be required to obtain?
Permit bond
Jennifer is a producer for Goshen Insurance Agency. She is also the person at the agency responsible
for selling and servicing surety bonds. Which of the following written documents do sureties use to
authorize a producer to act as the surety's agent in bond production?
A power of attorney
Following the Civil War, the growing number of complexity of financial/commercial relationships led
to the need for
Corporate suretyship
In the surety bond three-party relationship who is primarily responsible for fulfilling the obligation
and who typically has control of the obligation is the
Principal
A bond that guarantees that faulty work will be corrected and defective materials will be replaced for
a period of one year or less that is usually provided with a performance bond at no additional cost is a
Maintenance bond
In bonds under this classification, the surety pays the entire bond penalty if the principal fails to
complete the obligations. Which one of the following bond classifications is described?
Forfeiture bonds
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?
100% Correct Answers.
Which one of the following characteristics is unique under American personal suretyship compared
with corporate suretyship?
Sureties were protected by laws that were favorable to them
Except in the case of a forfeiture bond, if the principal defaults the surety will pay
Up to the bond penalty, but no more than the obligee's actual loss amount
CB Construction entered into a construction contract with Lee Properties. The contract required that
CB Construction obtain a performance bond, with Lee Properties named as the obligee. Performance
bonds guarantee that the obligee will be indemnified for any loss resulting from the principal's failure
to perform the work
According to the contract, plans, and specifications; at the agreed price; and within the time allowed
Which of the following 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 is an example of a third-party beneficiary on a given bond?
An heir on a fiduciary executory bond
Bonds under this classification guarantee that the principal will properly account for and remit
government funds collected as required. Which license and permit bond classification is described?
Tax or fee bonds
The two basic types of surety bonds that are written today are
Contract surety bonds and commercial surety bonds
A basic type of bond that involves all situations in which sureties guarantee performance of
obligations that generally do not arise from contract is
Commercial surety bonds
When evaluating a surety claim, claims representatives are often assisted by outside legal counsel.
Which one of the following other professionals often assist claims representatives?
Engineers
The 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
Surety
Paul has the legal responsibility for the care for his brother, who is a legally incompetent person, and
for his brother's property. Paul is required to obtain a bond that guarantees he will exercise his duties
faithfully and account for all property received. This bond is called
A fiduciary bond
,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
Bonds for which the laws specify the bond conditions and for which all three parties are dictated by
the applicable law rather than the bond provisions are
Statutory bonds
A surety bond is a written document in which one party guarantees a second party's
Performance to a third party for the second party's failure to fulfill an obligation
Unless the cosureties limit their respective liabilities in a bond, when two or more cosureties execute
a bond with the same principal, their liability to the obligee is
Joint and several
A group that educates the general public, legislative bodies, contractor associations, and others about
the benefits of surety bonds is
The National Association of Surety Bond Producers (NASBP)
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
Because most bonds are "joint and several liability" documents, the obligee can recover losses from
The principal or the surety, or from both
The Miller Act was passed to require principals, in addition to furnishing a performance bond, to
furnish a separate payment bond guaranteeing payment of all bills incurred by the contractor
For labor and materials at the project completion for all federal jobs
Judicial bonds
Are a category of court bonds that arise out of litigation and are posted by persons seeking or
appealing a remedy in court
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
An administrator
In accordance with a contract to build a county shed for the Village of Malcolm, Raymone
Construction purchases a contract surety bond from SureRite Insurance. Identify the principal,
obligee, and surety in this suretyship.
Principal- Raymone Construction; obligee- Village of Malcolm; Surety- SureRite Insurance
In an unlimited cosurety arrangement, the obligee can collect
, The full loss from any of the cosureties up to the penal sum of the bond
WP Hospitality hired Green Builders to build a new hotel. As part of the contract, WP Hospitality
required that Green Builders obtain a surety bond to guarantee that it would pay all subcontractors
for their labor and materials. The payment bond was obtained from Blue Surety. Which one of the
following is a potential third-party beneficiary in this surety relationship?
Subcontractors
Under a bid bond, if the bid is accepted and the principal refuses to enter into the contract or fails to
provide the additional required bonds, subject to the penal amount of the bond, the obligee is
generally entitled to be paid
The difference between the amount of the principal's bid and the next lowest bid the obligee finally
accepts
Public official bonds are written for principals who have administrative duties but do not handle
money and who
Include commissioners, assessors, judges, coroners, town clerks, engineers, and auditors
Ellen was planning a large family reunion at a local park. She wanted to reserve the picnic tables, and
have use of the restrooms at the park. As a prerequisite to using the park, the township required that
Ellen obtain a commercial surety bond. Which one of the following types of surety bonds would Ellen
be required to obtain?
Permit bond
Jennifer is a producer for Goshen Insurance Agency. She is also the person at the agency responsible
for selling and servicing surety bonds. Which of the following written documents do sureties use to
authorize a producer to act as the surety's agent in bond production?
A power of attorney
Following the Civil War, the growing number of complexity of financial/commercial relationships led
to the need for
Corporate suretyship
In the surety bond three-party relationship who is primarily responsible for fulfilling the obligation
and who typically has control of the obligation is the
Principal
A bond that guarantees that faulty work will be corrected and defective materials will be replaced for
a period of one year or less that is usually provided with a performance bond at no additional cost is a
Maintenance bond
In bonds under this classification, the surety pays the entire bond penalty if the principal fails to
complete the obligations. Which one of the following bond classifications is described?
Forfeiture bonds
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?
