AFSB 151 FINAL 182 2026 FINAL PAPER
COMPLETE QUESTIONS AND ANSWERS FULL
SOLUTION
◉ Under a public official bond guaranteeing the honesty of a
treasurer,
Answer: He or she must account for the cash that he or she holds
while in office.
◉ 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
Answer: An administrator
◉ 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
Answer: A plaintiff bond
◉ The legally mandated hazardous waste facilities performance
bond
,Answer: Can be posted only for hazardous waste facilities with
permits, and it requires an underwriting review of the closure plan.
◉ The principal on a hazardous waste bond
Answer: Is an owner or operator of a hazardous waste facility and is
responsible for closure and postclosure care of the facility.
◉ In the next step of the bond prequalification process, once the
producer has compiled the contractor's financial documents
showing significant liquidity,
Answer: The producer may facilitate underwriter interviews to help
determine the contractor's experience in meeting past contractual
obligations.
◉ A contractor's percentage-of-completion estimates
Answer: Are based on the contractor's ability to estimate the cost to
complete the project and recognize income and profit as they accrue
during the project.
◉ A $5 million/$20 million contract surety credit line means that
the surety is willing to
Answer: Bond single jobs up to a contract price of $5 million when
the aggregate contract backlog does not exceed $20 million.
,◉ Which one of the following statements is true regarding surety
producers' promotion?
Answer: Participating in professional seminars and construction
industry associations is an excellent way to communicate to a target
audience.
◉ When developing one aspect of the business plan, the planning
group should consider their agency's philosophy and culture,
management quality and commitment, team motivation and
dedication, resources, and the continuity of ownership and
management. Which one of the following describes this aspect of the
planning process?
Answer: Identify the agency's strengths and weaknesses
◉ Which one of these categories of court bonds is written primarily
on the basis of an attorney's character and reputation for
trustworthiness?
Answer: Fiduciary bonds
◉ Producers of public official bonds serve themselves and their
prospective principals by
Answer: Offering their services in September after primary elections
are over and the candidates are known.
, ◉ Staff underwriting activities generally include which one of the
following?
Answer: Formulating underwriting policy
◉ In the protective phase of the bond underwriting decision,
indemnity is waived only for what type of bonds?
Answer: The smallest and least hazardous bonds
◉ When a corporation has a number of subsidiaries that will all
require bonds, what type of agreement can be used that would allow
the parent to provide indemnity for its current subsidiaries and
affiliates, as well as for companies it might acquire or form in the
future.
Answer: Omnibus agreement
◉ An example of a common addendum that might address a
principal's concern about the conditions of a general agreement of
indemnity (GAI) is
Answer: Spousal exemption
◉ Generally, what type of individuals cause most public official bond
losses?
Answer: Dishonest individuals
COMPLETE QUESTIONS AND ANSWERS FULL
SOLUTION
◉ Under a public official bond guaranteeing the honesty of a
treasurer,
Answer: He or she must account for the cash that he or she holds
while in office.
◉ 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
Answer: An administrator
◉ 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
Answer: A plaintiff bond
◉ The legally mandated hazardous waste facilities performance
bond
,Answer: Can be posted only for hazardous waste facilities with
permits, and it requires an underwriting review of the closure plan.
◉ The principal on a hazardous waste bond
Answer: Is an owner or operator of a hazardous waste facility and is
responsible for closure and postclosure care of the facility.
◉ In the next step of the bond prequalification process, once the
producer has compiled the contractor's financial documents
showing significant liquidity,
Answer: The producer may facilitate underwriter interviews to help
determine the contractor's experience in meeting past contractual
obligations.
◉ A contractor's percentage-of-completion estimates
Answer: Are based on the contractor's ability to estimate the cost to
complete the project and recognize income and profit as they accrue
during the project.
◉ A $5 million/$20 million contract surety credit line means that
the surety is willing to
Answer: Bond single jobs up to a contract price of $5 million when
the aggregate contract backlog does not exceed $20 million.
,◉ Which one of the following statements is true regarding surety
producers' promotion?
Answer: Participating in professional seminars and construction
industry associations is an excellent way to communicate to a target
audience.
◉ When developing one aspect of the business plan, the planning
group should consider their agency's philosophy and culture,
management quality and commitment, team motivation and
dedication, resources, and the continuity of ownership and
management. Which one of the following describes this aspect of the
planning process?
Answer: Identify the agency's strengths and weaknesses
◉ Which one of these categories of court bonds is written primarily
on the basis of an attorney's character and reputation for
trustworthiness?
Answer: Fiduciary bonds
◉ Producers of public official bonds serve themselves and their
prospective principals by
Answer: Offering their services in September after primary elections
are over and the candidates are known.
, ◉ Staff underwriting activities generally include which one of the
following?
Answer: Formulating underwriting policy
◉ In the protective phase of the bond underwriting decision,
indemnity is waived only for what type of bonds?
Answer: The smallest and least hazardous bonds
◉ When a corporation has a number of subsidiaries that will all
require bonds, what type of agreement can be used that would allow
the parent to provide indemnity for its current subsidiaries and
affiliates, as well as for companies it might acquire or form in the
future.
Answer: Omnibus agreement
◉ An example of a common addendum that might address a
principal's concern about the conditions of a general agreement of
indemnity (GAI) is
Answer: Spousal exemption
◉ Generally, what type of individuals cause most public official bond
losses?
Answer: Dishonest individuals
