SOFE AFE Exam Questions Free Practice Test

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Questions # 31:

Duration is a measure of the first-order interest rate sensitivity of a financial instrument.

Options:

True

False

Expert Solution

Questions # 32:

Uncollected premiums

Options:

Are also an asset in statutory accounting

Are usually those past the due date but in the grace period

Accounting is similar to that for deferred premiums in that only the net premiums are necessary to match the reserve liability

Only A and B

Expert Solution

Questions # 33:

The private pools can fall in which two categories:

Options:

Risk retention and sale groups

Risk retention and purchasing groups

Public and purchasing groups

None of the above

Expert Solution

Questions # 34:

Coverage of risks that do not fit normal underwriting patterns and that are not commensurate with standard rates is normally refers to as:

Options:

Surplus lines

Commercial lines

Risk lines

Standardized lines

Expert Solution

Questions # 35:

Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. In such a case the Accounting Department is responsible for all of the following EXCEPT:

Options:

Supplying the Investment Department with correct data and reports that summarize all loan transactions

Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs

The design, maintenance, and accuracy of accounting records, for periodic management and exception reports, and for statutory statement preparation

Its records may or may not provide the needed data to support this reporting function

Expert Solution

Questions # 36:

Which of the following is NOT the category of Life and health insurers in Canada?

Options:

Canadian Companies

Fraternal Benefit Societies

Reassurance Companies

Provincially Licensed Companies

Expert Solution

Questions # 37:

Prepayment of a conventional mortgage loan, prior to its specified maturity, is discouraged through the general market acceptance of significant prepayment penalties. Often these penalties are calculated so that when prevailing market interest rates are:

Options:

Lower than the rate on the loan being repaid the borrower has to make up the interest rate differential and the lender is essentially “made whole” for a potential loss of interest.

Greater than the rate on the loan being repaid the borrower has to make up the interest rate differential and the lender is essentially “made whole” for a potential loss of interest.

Equal to the rate on the loan being repaid the borrower has to make up the interest rate differential and the lender is essentially “made whole” for a potential loss of interest.

Lower than the rate of interest being paid to the borrower has to make up the interest rate differential and the lender is essentially “made whole” for a potential loss of interest.

Expert Solution

Questions # 38:

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date is called:

Options:

face value

fair value

market value

transaction value

Expert Solution

Questions # 39:

What features a reserve that accumulates at company declared credited interest rates, which are periodically reset?

Options:

Credited life insurance

Periodic life insurance

Premium life insurance

Universal life insurance

Expert Solution

Questions # 40:

Changes in existing policies that may result in additional premiums or return premiums, such as increases or decreases in coverage limits, in:

Options:

Endorsement

Audit premiums

Change plan

Policyholder dividends

Expert Solution

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