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CPCU 540 Practice Questions
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Final Practice Exam - CPCU 540 5: Assessing Investment Opportuniti... Exam Review Ch. 5: I
134 terms 43 terms 75 terms 11 terms
Grace_Lewis41 Preview dfaust22 Preview colette8623 Preview Kev
The NAIC Own Risk and Solvency Assessment (ORSA) Imposes rigid structure
does all of the following, EXCEPT: 3 multiple choice options
Which one of the following describes what effect, if any, It will increase both net income and policyholder's surplus.
a reduction in an insurer's loss reserves will have on net 3 multiple choice options
income and policyholder's surplus in the year that any
adjustment is made?
Risky Insurance Company has a risk-based capital (RBC) Will require Risky Insurance Company to file a comprehensive plan.
level of 200 percent of the authorized control level. At 3 multiple choice options
this level, the regulator
The risk that customers will fail to make promised Credit risk.
payments as they come due is 3 multiple choice options
FAM Insurance issued $100 million in catastrophe bonds he SPV will provide 8 percent in interest each year and return the principal at the
through a special purpose vehicle (SPV). Coverage end of the 3-year term.
attaches when losses from a Category 3 or greater 3 multiple choice options
hurricane exceed $50 million. The bond pays 8 percent
interest and has a 3-year term. Which one of the
following correctly states how the catastrophe bond will
respond if FAM Insurance experiences $35 million in
losses from a Category 4 hurricane during the bond
term?
An insurer can improve its balance sheet values by Sale and leaseback
increasing the value of its assets. Which one of the 3 multiple choice options
following is a way of accomplishing this?
, Robert has borrowed $5,000 for six months at an interest $5,150.
rate of six percent simple interest per year. At the end of
3 multiple choice options
six months, the amount Bob needs to pay off the loan
plus interest is
Based on the coefficient of variation, which one of the Mean return of 10%; standard deviation of 25%
following investment portfolios has the lowest relative 3 multiple choice options
risk?
When quantifying an investment risk by its variance, to The data set units by taking the square root of the answer.
measure the deviation of an investment's return from the 3 multiple choice options
average, it is useful to convert the variance units back to
A legal document that details the terms of an investment An indenture agreement.
bond is referred to as 3 multiple choice options
An insurance company's investment strategy must be tied Investment returns are used to pay losses as they come due.
to its underwriting strategy because 3 multiple choice options
By diversifying one's investment exposure by investing in Unsystematic risk
stock, bonds, real estate, and commodities, which one of 3 multiple choice options
the following risks would be most affected?
Which one of the following is the coupon rate of a bond .040
with a $1,000 face value, a $40 coupon, and is selling at 3 multiple choice options
"80.0"?
Which one of the following statements about common Although common stock prices can be very volatile, they tend to earn more than
stock is most correct? preferred stocks for the investor over the long run.
3 multiple choice options
Anticipation of which one of the following by investors Higher earnings
would tend to increase stock prices? 3 multiple choice options
Laura borrowed $10,000 as a student loan on September $13,686
1, 2020. She will graduate on September 1, 2024. Interest 3 multiple choice options
begins accruing on the loan immediately; however, Laura
does not have to make any payments until graduation.
The interest rate is eight percent, compounded semi-
annually. What is the total amount Laura will owe for this
loan on September 1, 2024?
Patrick was comparing the combined ratios of different 105%
insurers. Which one of the following combined ratios 3 multiple choice options
means that losses and expenses have exceeded premium
income?
CPCU 540 Practice Questions
Save
Students also studied
Final Practice Exam - CPCU 540 5: Assessing Investment Opportuniti... Exam Review Ch. 5: I
134 terms 43 terms 75 terms 11 terms
Grace_Lewis41 Preview dfaust22 Preview colette8623 Preview Kev
The NAIC Own Risk and Solvency Assessment (ORSA) Imposes rigid structure
does all of the following, EXCEPT: 3 multiple choice options
Which one of the following describes what effect, if any, It will increase both net income and policyholder's surplus.
a reduction in an insurer's loss reserves will have on net 3 multiple choice options
income and policyholder's surplus in the year that any
adjustment is made?
Risky Insurance Company has a risk-based capital (RBC) Will require Risky Insurance Company to file a comprehensive plan.
level of 200 percent of the authorized control level. At 3 multiple choice options
this level, the regulator
The risk that customers will fail to make promised Credit risk.
payments as they come due is 3 multiple choice options
FAM Insurance issued $100 million in catastrophe bonds he SPV will provide 8 percent in interest each year and return the principal at the
through a special purpose vehicle (SPV). Coverage end of the 3-year term.
attaches when losses from a Category 3 or greater 3 multiple choice options
hurricane exceed $50 million. The bond pays 8 percent
interest and has a 3-year term. Which one of the
following correctly states how the catastrophe bond will
respond if FAM Insurance experiences $35 million in
losses from a Category 4 hurricane during the bond
term?
An insurer can improve its balance sheet values by Sale and leaseback
increasing the value of its assets. Which one of the 3 multiple choice options
following is a way of accomplishing this?
, Robert has borrowed $5,000 for six months at an interest $5,150.
rate of six percent simple interest per year. At the end of
3 multiple choice options
six months, the amount Bob needs to pay off the loan
plus interest is
Based on the coefficient of variation, which one of the Mean return of 10%; standard deviation of 25%
following investment portfolios has the lowest relative 3 multiple choice options
risk?
When quantifying an investment risk by its variance, to The data set units by taking the square root of the answer.
measure the deviation of an investment's return from the 3 multiple choice options
average, it is useful to convert the variance units back to
A legal document that details the terms of an investment An indenture agreement.
bond is referred to as 3 multiple choice options
An insurance company's investment strategy must be tied Investment returns are used to pay losses as they come due.
to its underwriting strategy because 3 multiple choice options
By diversifying one's investment exposure by investing in Unsystematic risk
stock, bonds, real estate, and commodities, which one of 3 multiple choice options
the following risks would be most affected?
Which one of the following is the coupon rate of a bond .040
with a $1,000 face value, a $40 coupon, and is selling at 3 multiple choice options
"80.0"?
Which one of the following statements about common Although common stock prices can be very volatile, they tend to earn more than
stock is most correct? preferred stocks for the investor over the long run.
3 multiple choice options
Anticipation of which one of the following by investors Higher earnings
would tend to increase stock prices? 3 multiple choice options
Laura borrowed $10,000 as a student loan on September $13,686
1, 2020. She will graduate on September 1, 2024. Interest 3 multiple choice options
begins accruing on the loan immediately; however, Laura
does not have to make any payments until graduation.
The interest rate is eight percent, compounded semi-
annually. What is the total amount Laura will owe for this
loan on September 1, 2024?
Patrick was comparing the combined ratios of different 105%
insurers. Which one of the following combined ratios 3 multiple choice options
means that losses and expenses have exceeded premium
income?
