AFSB 151 UPDATED EXAMS TEST PAPER
QUESTIONS AND ANSWERS SURE A+
✔✔The surety's most important right acquired through subrogation is the right of the
obligee to use the contract consideration to complete the contract. - ✔✔Which one of
the following statements is true regarding subrogation when a contract default has
occurred and when the principal has admitted to it?
✔✔Under reinsurance or cosurety agreements, - ✔✔Claim personnel must be aware of
the reinsurance and cosurety arrangements into which the surety has entered with
respect to the risk on pending claims.
✔✔A basic type of bond that involves all situations in which sureties guarantee
performance of obligations that generally do not arise from contracts is -
✔✔Commercial surety bonds
✔✔Which one of the following developed in the United States to guarantee the large
amounts of money involved in the country's industrial and commercial growth? -
✔✔Corporate suretyship
, ✔✔In addition to determining the feasibility of the surety's undertaking a particular risk,
the premium for the risk, and the conditions that the applicant should meet, the
underwriter determines - ✔✔The necessity for the principal to file collateral.
✔✔Suretyship and insurance are alike in that - ✔✔Insurance commissioners regulate
both.
✔✔The surety bond three-party relationship, the party who guarantees fulfillment of the
obligation and who will either perform the obligation or pay the costs for its fulfillment is
the - ✔✔Surety
✔✔Instead of holding a principal's assets as security, a surety might choose to hold an
instrument issued by a commercial bank for the principal, but with the surety named as
the beneficiary. What is this instrument? - ✔✔An irrevocable standby letter of credit
✔✔A surety choosing to write a risky bond typically insists that the principal post
adequate collateral in the form of - ✔✔A liquid asset, such as a certificate of deposit, or
cash.
✔✔A type of reinsurance in which the reinsurer evaluates the submission and can
accept or reject it, and which is often called "nonobligatory reinsurance," is -
✔✔Facultative reinsurance
✔✔The Miller Act was passed to require principals, in addition to furnishing a
performance bond, to furnish a separate payment bond guaranteeing payment of all
bills incurred by the contractor - ✔✔For labor and materials at the project completion for
all federal jobs
✔✔Performance bonds guarantee that the obligee will be indemnified for any loss
resulting from the principal's failure to perform the work - ✔✔According to the contract,
plans, and specifications; at the agreed price; and within the time allowed.
✔✔This classification of license and permit bonds guarantees that the principal will
conduct specific business activities according to the law and protect the public from
misrepresentation or fraudulent practices by the seller. Which of the following
classification of license and permit bonds is described? - ✔✔Merchandising and dealer
bonds
✔✔In this public official category of bonds, sureties pay losses when subordinates in the
principal's office cause them, as well as when the principal causes them. This described
category of bonds - ✔✔Is officials who handle public funds, and the principals are
charged with honesty and faithful performance of duty while handling money as required
by law.
QUESTIONS AND ANSWERS SURE A+
✔✔The surety's most important right acquired through subrogation is the right of the
obligee to use the contract consideration to complete the contract. - ✔✔Which one of
the following statements is true regarding subrogation when a contract default has
occurred and when the principal has admitted to it?
✔✔Under reinsurance or cosurety agreements, - ✔✔Claim personnel must be aware of
the reinsurance and cosurety arrangements into which the surety has entered with
respect to the risk on pending claims.
✔✔A basic type of bond that involves all situations in which sureties guarantee
performance of obligations that generally do not arise from contracts is -
✔✔Commercial surety bonds
✔✔Which one of the following developed in the United States to guarantee the large
amounts of money involved in the country's industrial and commercial growth? -
✔✔Corporate suretyship
, ✔✔In addition to determining the feasibility of the surety's undertaking a particular risk,
the premium for the risk, and the conditions that the applicant should meet, the
underwriter determines - ✔✔The necessity for the principal to file collateral.
✔✔Suretyship and insurance are alike in that - ✔✔Insurance commissioners regulate
both.
✔✔The surety bond three-party relationship, the party who guarantees fulfillment of the
obligation and who will either perform the obligation or pay the costs for its fulfillment is
the - ✔✔Surety
✔✔Instead of holding a principal's assets as security, a surety might choose to hold an
instrument issued by a commercial bank for the principal, but with the surety named as
the beneficiary. What is this instrument? - ✔✔An irrevocable standby letter of credit
✔✔A surety choosing to write a risky bond typically insists that the principal post
adequate collateral in the form of - ✔✔A liquid asset, such as a certificate of deposit, or
cash.
✔✔A type of reinsurance in which the reinsurer evaluates the submission and can
accept or reject it, and which is often called "nonobligatory reinsurance," is -
✔✔Facultative reinsurance
✔✔The Miller Act was passed to require principals, in addition to furnishing a
performance bond, to furnish a separate payment bond guaranteeing payment of all
bills incurred by the contractor - ✔✔For labor and materials at the project completion for
all federal jobs
✔✔Performance bonds guarantee that the obligee will be indemnified for any loss
resulting from the principal's failure to perform the work - ✔✔According to the contract,
plans, and specifications; at the agreed price; and within the time allowed.
✔✔This classification of license and permit bonds guarantees that the principal will
conduct specific business activities according to the law and protect the public from
misrepresentation or fraudulent practices by the seller. Which of the following
classification of license and permit bonds is described? - ✔✔Merchandising and dealer
bonds
✔✔In this public official category of bonds, sureties pay losses when subordinates in the
principal's office cause them, as well as when the principal causes them. This described
category of bonds - ✔✔Is officials who handle public funds, and the principals are
charged with honesty and faithful performance of duty while handling money as required
by law.
