1|Page
AU 60 FINAL EXAM TEST QUESTIONS AND
CORECT DETAILED ANSWERS TOP RATED
VERSION FOR 2026 ALREADY A GRADED
WITH EXPERT FEEDBACK |NEW AND
REVISED
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
In developing insurance rates, which one of the following is generally
used as a starting point to estimate future losses? - ANSWER- Past loss
experience
Which one of the following statements is correct regarding wrap-ups? -
ANSWER- Activities covered by the wrap-up program should be
excluded from the participating contractors' primary insurance policies.
Contractors often form which one of the following alternative forms of
business ownership to perform a large construction project? -
ANSWER- Joint venture
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Insurers will sometimes use composite rating when determining the
premium on an account. Which one of the following is true regarding
composite rating? - ANSWER- Composite rating is primarily used for
its administrative convenience.
All of the following are objectives of rate regulation, EXCEPT: -
ANSWER- Rates promote availability and affordability of insurance.
Which one of the following statements regarding motor vehicle reports
(MVRs) is true? - ANSWER- They are the most frequently used outside
source of information for auto insurance.
Maja, who has 29 years of experience as a professional liability
underwriter, works in the home office of Richley Insurance Company.
Her primary responsibilities involve formulating underwriting policy
and revising underwriting guides for various lines of professional
liability insurance that will be used by personnel in the company's field
offices. Maja is functioning as a - ANSWER- Staff underwriter.
Prudence of operations indicates an organization's ability to -
ANSWER- Conduct its operations within the limits of its capabilities.
All of the following are reasons that an underwriter might want to obtain
information in addition to the application, EXCEPT: - ANSWER- To
postpone a decision
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Which one of the following is an example of an efficiency ratio? -
ANSWER- Accounts receivable turnover ratio
Sarbanes-Oxley prompted the SEC to issue interpretive guidance for
improved disclosure in the management discussion and analysis
(MD&A) report of an organization. Which one of the following is an
area of guidance from Sarbanes-Oxley? - ANSWER- Disclosure of
certain trading activities
Which one of the following negotiation styles focuses only on short term
goals and does not support the goal of building a long term relationship?
- ANSWER- Competing
When insuring a partnership, it is essential to identify which one of the
following on the policy declaration page? - ANSWER- The partnership
Which one of the following statements is correct with regard to the
submission evaluation step in the underwriting process? - ANSWER-
Government reports that provide underwriting information include
motor vehicle reports, criminal records, and civil court records.
Which one of the following is true regarding ratio analysis? - ANSWER-
Ratio analysis can be used to both analyze single companies and make
inter-company comparisons.
ABC Company purchased a building in Manhattan in 1935. There is no
mortgage on the property. Which one of the following statements best
AU 60 FINAL EXAM TEST QUESTIONS AND
CORECT DETAILED ANSWERS TOP RATED
VERSION FOR 2026 ALREADY A GRADED
WITH EXPERT FEEDBACK |NEW AND
REVISED
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
In developing insurance rates, which one of the following is generally
used as a starting point to estimate future losses? - ANSWER- Past loss
experience
Which one of the following statements is correct regarding wrap-ups? -
ANSWER- Activities covered by the wrap-up program should be
excluded from the participating contractors' primary insurance policies.
Contractors often form which one of the following alternative forms of
business ownership to perform a large construction project? -
ANSWER- Joint venture
,2|Page
Insurers will sometimes use composite rating when determining the
premium on an account. Which one of the following is true regarding
composite rating? - ANSWER- Composite rating is primarily used for
its administrative convenience.
All of the following are objectives of rate regulation, EXCEPT: -
ANSWER- Rates promote availability and affordability of insurance.
Which one of the following statements regarding motor vehicle reports
(MVRs) is true? - ANSWER- They are the most frequently used outside
source of information for auto insurance.
Maja, who has 29 years of experience as a professional liability
underwriter, works in the home office of Richley Insurance Company.
Her primary responsibilities involve formulating underwriting policy
and revising underwriting guides for various lines of professional
liability insurance that will be used by personnel in the company's field
offices. Maja is functioning as a - ANSWER- Staff underwriter.
Prudence of operations indicates an organization's ability to -
ANSWER- Conduct its operations within the limits of its capabilities.
All of the following are reasons that an underwriter might want to obtain
information in addition to the application, EXCEPT: - ANSWER- To
postpone a decision
, 3|Page
Which one of the following is an example of an efficiency ratio? -
ANSWER- Accounts receivable turnover ratio
Sarbanes-Oxley prompted the SEC to issue interpretive guidance for
improved disclosure in the management discussion and analysis
(MD&A) report of an organization. Which one of the following is an
area of guidance from Sarbanes-Oxley? - ANSWER- Disclosure of
certain trading activities
Which one of the following negotiation styles focuses only on short term
goals and does not support the goal of building a long term relationship?
- ANSWER- Competing
When insuring a partnership, it is essential to identify which one of the
following on the policy declaration page? - ANSWER- The partnership
Which one of the following statements is correct with regard to the
submission evaluation step in the underwriting process? - ANSWER-
Government reports that provide underwriting information include
motor vehicle reports, criminal records, and civil court records.
Which one of the following is true regarding ratio analysis? - ANSWER-
Ratio analysis can be used to both analyze single companies and make
inter-company comparisons.
ABC Company purchased a building in Manhattan in 1935. There is no
mortgage on the property. Which one of the following statements best
