AU 60 MISSED QUESTIONS
CHAPTER FINAL QUESTIONS &
ANSWERS 100% CORRECT
When insuring a partnership, it is essential to identify which one of the following on
the policy declaration page?
Choose one answer.
A. The partnership
B. All partners
C. General partners only
D. All partners and their share of the partnership - ANSWERA. The partnership
If a company's inventory turnover ratio is higher than the industry benchmark, it
indicates that
Choose one answer.
A. Its inventory is becoming obsolete compared to that of its competitors.
B. The company is holding its inventory longer than its competitors.
C. The company is selling its inventory more quickly than its competitors.
D. The company's inventory is generating higher costs than that of its competitors. -
ANSWERC. The company is selling its inventory more quickly than its competitors.
Insurance classification systems group risks that share similar characteristics and
that usually
Choose one answer.
A. Have the same size exposure base.
B. Have the same likelihood of loss.
C. Generate similar rates and premiums.
D. Are not subject to catastrophic loss. - ANSWERB. Have the same likelihood of
loss.
, Insurance Company's actuary has calculated the pure premium for its automobile
insurance line as $67. Fixed expenses for the line are $25 per exposure unit, and the
loading for profit and contingencies is 7%. Using the pure premium ratemaking
method and rounding to the nearest whole dollar, which one of the following is the
rate per exposure unit?
Choose one answer.
A. $86
B. $99
C. $106
D. $115 - ANSWERB. $99
Which one of the following is determined by a company's underwriting policy?
Choose one answer.
A. The underwriting authority the insurer grants its producers
B. Composition of the insurer's book of business
C. The market pursued by the insurer
D. The rating organization to which the insurer will belong - ANSWERB. Composition
of the insurer's book of business
Which one of the following statements is true regarding ratemaking in different types
of insurance?
Choose one answer.
A. Most losses from catastrophic events, such as hurricanes, are included in
ratemaking data in the affected states.
B. Trending of losses in fire insurance is generally restricted to claim severity.
C. The experience period used for property causes of loss other than fire is usually
five years or less.
D. Applying loss development factors to data is critical when claims settle quickly
and loss reserves are relatively small. - ANSWERB. Trending of losses in fire
insurance is generally restricted to claim severity.
Which one of the following types of individual rating plans can be used by medium to
large insureds in combination with risk control and allows the insured to manage its
cash flow by avoiding upfront payments?
Choose one answer.
A. Schedule rating plan
CHAPTER FINAL QUESTIONS &
ANSWERS 100% CORRECT
When insuring a partnership, it is essential to identify which one of the following on
the policy declaration page?
Choose one answer.
A. The partnership
B. All partners
C. General partners only
D. All partners and their share of the partnership - ANSWERA. The partnership
If a company's inventory turnover ratio is higher than the industry benchmark, it
indicates that
Choose one answer.
A. Its inventory is becoming obsolete compared to that of its competitors.
B. The company is holding its inventory longer than its competitors.
C. The company is selling its inventory more quickly than its competitors.
D. The company's inventory is generating higher costs than that of its competitors. -
ANSWERC. The company is selling its inventory more quickly than its competitors.
Insurance classification systems group risks that share similar characteristics and
that usually
Choose one answer.
A. Have the same size exposure base.
B. Have the same likelihood of loss.
C. Generate similar rates and premiums.
D. Are not subject to catastrophic loss. - ANSWERB. Have the same likelihood of
loss.
, Insurance Company's actuary has calculated the pure premium for its automobile
insurance line as $67. Fixed expenses for the line are $25 per exposure unit, and the
loading for profit and contingencies is 7%. Using the pure premium ratemaking
method and rounding to the nearest whole dollar, which one of the following is the
rate per exposure unit?
Choose one answer.
A. $86
B. $99
C. $106
D. $115 - ANSWERB. $99
Which one of the following is determined by a company's underwriting policy?
Choose one answer.
A. The underwriting authority the insurer grants its producers
B. Composition of the insurer's book of business
C. The market pursued by the insurer
D. The rating organization to which the insurer will belong - ANSWERB. Composition
of the insurer's book of business
Which one of the following statements is true regarding ratemaking in different types
of insurance?
Choose one answer.
A. Most losses from catastrophic events, such as hurricanes, are included in
ratemaking data in the affected states.
B. Trending of losses in fire insurance is generally restricted to claim severity.
C. The experience period used for property causes of loss other than fire is usually
five years or less.
D. Applying loss development factors to data is critical when claims settle quickly
and loss reserves are relatively small. - ANSWERB. Trending of losses in fire
insurance is generally restricted to claim severity.
Which one of the following types of individual rating plans can be used by medium to
large insureds in combination with risk control and allows the insured to manage its
cash flow by avoiding upfront payments?
Choose one answer.
A. Schedule rating plan
