AU 60 final exam Updated Question and
Answer | 100% Correct Solutions | Grade
A+
• The principal purpose of underwriting is to -✓✓ 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 -✓✓ 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? -✓✓ $51
• All of the following are advantages of the sole proprietorship type of business
ownership, EXCEPT: -✓✓ 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? -✓✓ Employee
• The "bottom line" of an income statement shows the organization's -✓✓ Net
income.
Answer | 100% Correct Solutions | Grade
A+
• The principal purpose of underwriting is to -✓✓ 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 -✓✓ 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? -✓✓ $51
• All of the following are advantages of the sole proprietorship type of business
ownership, EXCEPT: -✓✓ 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? -✓✓ Employee
• The "bottom line" of an income statement shows the organization's -✓✓ Net
income.
