AU 60 FINAL EXAMINATION 2026 ACTUAL
TWO VERSIONS COMPLETE QUESTIONS
WITH DETAILED VERIFIED ANSWERS
GRADED A+
⩥ The principal purpose of underwriting is to. Answer: Develop and
maintain a profitable book of business for the insurer.
⩥ The goal of actuaries and underwriters in designing a rating system is
to make each class. Answer: As homogeneous as possible without
sacrificing the predictive accuracy that large numbers create.
⩥ ABC Insurance Company's actuary has calculated the pure premium
for the company's homeowner's insurance line as $40. Fixed expenses
for the line are $2.50 per exposure unit and variable expenses are 12
percent. The company's loading for profits and contingencies is 5
percent. Using the pure premium ratemaking method and rounding to the
nearest whole dollar, which one of the following is the rate per exposure
unit that ABC needs to charge?. Answer: $51
⩥ All of the following are advantages of the sole proprietorship type of
business ownership, EXCEPT:. Answer: Limited liability
, ⩥ Home builder Jerry Barton engaged an electrician to install overhead
ceiling fans in many new homes. Jerry paid the electrician by the hour,
supervised his work, and had the right to discharge him. Which one of
the following terms best describes the employment status of the
electrician?. Answer: Employee
⩥ The "bottom line" of an income statement shows the organization's.
Answer: Net income.
⩥ An underwriter uses a firm's current assets when calculating the
current ratio. Current assets are. Answer: Cash and easily-liquidated
assets.
⩥ Which one of the following insurer representatives is most likely to
meet with the insured, see their operations, and review their financial
operations on an annual basis?. Answer: Premium auditor
⩥ A start-up company, New Corporation, issued 10,000 shares of stock
with a par value of $15 a share at $20 a share. What is the amount of
New's paid-in capital?. Answer: $200,000 (20x10k)
⩥ Which one of the following is an example of a noncurrent liability?.
Answer: Long-term notes payable
TWO VERSIONS COMPLETE QUESTIONS
WITH DETAILED VERIFIED ANSWERS
GRADED A+
⩥ The principal purpose of underwriting is to. Answer: Develop and
maintain a profitable book of business for the insurer.
⩥ The goal of actuaries and underwriters in designing a rating system is
to make each class. Answer: As homogeneous as possible without
sacrificing the predictive accuracy that large numbers create.
⩥ ABC Insurance Company's actuary has calculated the pure premium
for the company's homeowner's insurance line as $40. Fixed expenses
for the line are $2.50 per exposure unit and variable expenses are 12
percent. The company's loading for profits and contingencies is 5
percent. Using the pure premium ratemaking method and rounding to the
nearest whole dollar, which one of the following is the rate per exposure
unit that ABC needs to charge?. Answer: $51
⩥ All of the following are advantages of the sole proprietorship type of
business ownership, EXCEPT:. Answer: Limited liability
, ⩥ Home builder Jerry Barton engaged an electrician to install overhead
ceiling fans in many new homes. Jerry paid the electrician by the hour,
supervised his work, and had the right to discharge him. Which one of
the following terms best describes the employment status of the
electrician?. Answer: Employee
⩥ The "bottom line" of an income statement shows the organization's.
Answer: Net income.
⩥ An underwriter uses a firm's current assets when calculating the
current ratio. Current assets are. Answer: Cash and easily-liquidated
assets.
⩥ Which one of the following insurer representatives is most likely to
meet with the insured, see their operations, and review their financial
operations on an annual basis?. Answer: Premium auditor
⩥ A start-up company, New Corporation, issued 10,000 shares of stock
with a par value of $15 a share at $20 a share. What is the amount of
New's paid-in capital?. Answer: $200,000 (20x10k)
⩥ Which one of the following is an example of a noncurrent liability?.
Answer: Long-term notes payable
