AU 60 Missed Questions Chapter Final And Answers

AU 60 Missed Questions Chapter Final
And Answers
ABCpInsurancepispconsideringpenteringpnewpstatespasppartpofpitspgrowthpplan.pThepexecutiv
espofpABCpdecidepnotptoppursuepnewpbusinesspinplow-
incomepareaspofpstatespandpprovidepunderwriterspwithpapmappindicatingpthepareaspfrompwhi
chptheyparepnotptopacceptpapplications.pThisppositionplikelypviolatespregulationspthat
Chooseponepanswer.
p

A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
p

B.pLimitpallowablepclassifications.
p

C.pRestrictptheptimingpandpconditionspofpcoveragepcancellationspandpnonrenewals.
p

D.pSpecifyppolicyptermspandpconditions.p-pCORRECTppANSWER-
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.

Allpofpthepfollowingparepcharacteristicspofpindependentpcontractors,pEXCEPT:
Chooseponepanswer.
p

A.pAnpindependentpcontractorpworkspunderpapcontractpinpwhichponeppartyppromisespapcertai
npsumpofpmoneypinpreturnpforpthepotherpparty'spperformancepofpwork.
p

B.pIndependentpcontractorsparepnotpsubjectptopdirectionpandpcontrolpregardingpthepdetailspo
fpthepwork.p
p

C.pWhenpanpindependentpcontractor'spworkpispunsatisfactory,pthepusualprecoursepisptopdisc
hargepthepcontractor.
p

D.pIndependentpcontractorspoftenpprovidepapservicepinvolvingpsomepmeasurepofpspecializa
tion.p-pCORRECTppANSWER-
C.pWhenpanpindependentpcontractor'spworkpispunsatisfactory,pthepusualprecoursepisptopdisc
hargepthepcontractor.

Allpofpthepfollowingparepobjectivespofpratepregulation,pEXCEPT:
Chooseponepanswer.
p

A.pRatesparepadequateptoppaypforpincurredplossespandpexpenses.
p

B.pRatesppromotepavailabilitypandpaffordabilitypofpinsurance.
p

C.pRatespequitablypreflectpexpectedplossespandpexpensespofpthepparticularpinsured.
p

D.pRatespgeneratepnopmorepthanpapreasonablepprofitpforpthepinsurer.p-
pCORRECTppANSWER-B.pRatesppromotepavailabilitypandpaffordabilitypofpinsurance.

, Anpinsurerpmustpdecidepwhatpprovisionpforpprofitpandpcontingenciespshouldpbepincludedpinpt
hepratepandpshouldpconsiderpthepoverallpdesiredpratepofpreturn,pincludingplikelypreturnspfrom
pinvestmentpincomepversus

Chooseponepanswer.
p

A.pPolicyholderpsurplus.
p

B.pUnderwritingpprofit.
p

C.pLosspreservepamounts.

D.pLosspadjustmentpexpenses.p-pCORRECTppANSWER-B.pUnderwritingpprofit.

Anpunderwriterpispconductingpratiopanalysispandpdeterminespthatpapcompanyphaspapcurrentp
ratiopofp1.2.pWhichponepofpthepfollowingpadjustmentsptopthepcalculationpshouldpthepunderwri
terpmakeptopensurepthatpthepcompanypispableptopmeetpitspshortptermpobligations?
Chooseponepanswer.
p

A.pSubtractpthepvaluepofpthepcompany'splong-termpdebtpfrompthepcalculation.
p

B.pSubtractpthepvaluepofpthepcompany'spinventorypfrompthepcalculation.
p

C.pSubtractpthepvaluepofpthepcompany'spcashpfrompthepcalculation.
p

D.pSubtractpthepvaluepofpthepcompany'spaccountspreceivablepfrompthepcalculation.p-
pCORRECTppANSWER-

B.pSubtractpthepvaluepofpthepcompany'spinventorypfrompthepcalculation.

Financialpstatements
Chooseponepanswer.
p

A.pArepnotpusefulptopinsurancepprofessionalspbecausepofptheplimitedpnaturepofpinformationpp
rovided.
p

B.pCanpbepusedpbypagentspandpbrokersptopassesspcoveragepneeds.
p

C.pArepofpnopuseptopunderwritersporpclaimprepresentatives.
p

D.pCanpbepusefulpwhenpreadpindividuallypbutpfailptopprovidepapcomprehensiveppicturepwhenp
viewedptogether.p-pCORRECTppANSWER-
B.pCanpbepusedpbypagentspandpbrokersptopassesspcoveragepneeds.

Ifpapcompany'spinventorypturnoverpratiopisphigherpthanpthepindustrypbenchmark,pitpindicatesp
that
Chooseponepanswer.
p

A.pItspinventorypispbecomingpobsoletepcomparedptopthatpofpitspcompetitors.
p

B.pThepcompanypispholdingpitspinventoryplongerpthanpitspcompetitors.
p

C.pThepcompanypispsellingpitspinventorypmorepquicklypthanpitspcompetitors.
p

D.pThepcompany'spinventorypispgeneratingphigherpcostspthanpthatpofpitspcompetitors.p-
pCORRECTppANSWER-

C.pThepcompanypispsellingpitspinventorypmorepquicklypthanpitspcompetitors.