AU 60 Questions And Answers

AU 60 Questions And Answers
ApdroughtpinpthreepstatespwherepPQRpInsurancepCompanypwritespcoveragepleadptopanpund
erwritingpdirectiveptopnotpwritepbusinesspinpareaspsusceptibleptopwildfires.pThreepmonthspaft
erpthepdirectivepwaspissued,pthepVicepPresidentpofpUnderwritingporderedpapreviewpofprecentp
underwritingpfilesptopensurepthatpunderwriterspwerepadheringptopthispguideline.pThispreviewp
ispcalledpa(n)
Selectpone:
A.pQuarterlypreport.
B.pUnderwritingpaudit
C.pLosspreview.
D.pSpecialpeventpreview.p-pCORRECTppANSWER-B.pUnderwritingpaudit

ABCpInsurancepCompany'spactuaryphaspcalculatedptheppureppremiumpforpthepcompany'sph
omeowner'spinsuranceplinepasp$40.pFixedpexpensespforptheplineparep$2.50pperpexposurepun
itpandpvariablepexpensesparep12ppercent.pThepcompany'sploadingpforpprofitspandpcontingen
ciespisp5ppercent.pUsingptheppureppremiumpratemakingpmethodpandproundingptopthepneares
tpwholepdollar,pwhichponepofpthepfollowingpispthepratepperpexposurepunitpthatpABCpneedsptopc
harge?
Selectpone:
A.p$45
B.p$47
C.p$51
D.p$58p-pCORRECTppANSWER-C.p$51

ABCpInsurancepCompany'spratiopofppremiumsptopsurpluspisp2ptop1.pIfpthepstateprequirementp
wherepABCptransactspbusinesspisp3ptop1,pthenpABC
Selectpone:
A.pNeedsptopissuepmoreppoliciesptopbepinpcompliancepwithpstatepsurplusprequirements.
B.pCanpnoplongerpwritepnewpbusinesspinpthatpstate.
C.pIsplikelyptopbepthepsubjectpofpapDepartmentpofpInsurancepmarketpconductpexaminationpdu
eptopitspsolvencypindicators.
D.pIspmeetingpthepstate'spsurplusprequirement.p-pCORRECTppANSWER-
D.pIspmeetingpthepstate'spsurplusprequirement.

AcepWoodworkingpCompanypmakesphouseholdpfurniture.pWhichponepofpthepfollowingpbestp
describespanpexpensepthatpshouldpbepclassifiedpaspanpoperatingpexpenseponpAce'spincome
pstatement?

Selectpone:
A.pUtilitypchargespforpthepmanufacturingpplant
B.pCostspforpnewpfactorypequipment
C.pWagesppaidptopfurniturepassemblers

, D.pPaymentsptoplumberpsuppliersp-pCORRECTppANSWER-
A.pUtilitypchargespforpthepmanufacturingpplant

Alanpispapcommercialpinsurancepunderwriter.pHepispreviewingpthepapplicationpforpBp&pLpRest
aurant.pBp&pLpispopenpfromp6pAMptop2pPMpdailypandpofferspbothpseatedpdiningpandptake-
outpservicepforpbreakfastpandplunch.pTheprestaurantphadpapgoodpreputationpandpfinancialpre
portspwerepstrong,pbutpAlanpwaspconcernedpwhenpheplearnedpthatpthepriskpwasppartpofpapfra
nchisepagreement.pThepfranchiseparrangementpraisespapconcernpaboutpwhichponepofpthepfo
llowingpleadershippcharacteristics?
Selectpone:
A.pOperationalpauthority
B.pTraining
C.pQualitypofpwork
D.pPrudencepofpoperationsp-pCORRECTppANSWER-A.pOperationalpauthority

Thepentity'spmanagementpmaypbeprestrictedpbyptheirpfranchisepagreementpandpnotphavepth
epauthorityptopimplementpprocessesporpriskpcontrolpautonomously

Allpofpthepfollowingparepunderwritingpactivitiesptypicallypperformedpbypcorporatepunderwriter
s,pEXCEPT:
Selectpone:
A.pSupportpproducerspandpinsureds
B.pConductpunderwritingpaudits
C.pFormulatepunderwritingppolicy
D.pResearchpthepmarketp-pCORRECTppANSWER-A.pSupportpproducerspandpinsureds

Anpanalystpispcomparingpthepfinancialpdatapofptwopcompaniespthatpcompetepinpthepsamepind
ustry,pCompanypApandpCompanypB.pEachpofptheptwopcompaniesphaspthepsamepreturnponpa
ssetspratiop(ROA),pandpthepanalystpwantsptopunderstandphowpeachpispusingpitspresourcespto
pachievepthispresult.pFurtherpanalysisprevealspthatpCompanypAphaspaplowerpassetpturnoverpr

atiopthanpCompanypB.pThispanalysispindicatespthat
A.pCompanypBpispgeneratingpaphigherplevelpofpsalespinpproportionptopitspassetspthanpCompa
nypA.
B.pCompanypApispgeneratingpaphigherplevelpofpsalespinpproportionptopitspassetspthanpCompa
nypB.
C.pCompanypBpispretainingpaphigherplevelpofpnetpincomeprelativeptopsalespthanpCompanypA.
D.pCompanypApmayporpmaypnotpbepretainingpaphigherplevelpofpnetpincomeprelativeptopsalespt
hanpCompanypB.p-pCORRECTppANSWER-
A.pCompanypBpispgeneratingpaphigherplevelpofpsalespinpproportionptopitspassetspthanpCompa
nypA.

Anpinsurancepcompanypmustphavepadequateppolicyholders'psurpluspifpitpwishespto
Selectpone:
A.pPurchasepreinsurance.
B.pIncreasepitspwrittenppremiumpvolume.
C.pAvoidpadversepselection.