AFSB 151 Practice Exam Q's

AFSB 151 Practice Exam Q's A type of reinsurance transaction that involves an agreement between the primary insurer and the reinsurer specifying how to transfer risks, that defines the eligible risks in terms of lines and classes of business, that specifies the parties' obligations, and for which eligible risks are automatically reinsured, is - Treaty reinsurance A surety's liability for a surety bond can only cease to exist when the underlying obligation/agreement has - been performed as specified in the contract or when the bond has been canceled An organization that uses its collected data to calculate loss costs that member company underwriters use to determine premiums for risks is - The SFAA If the bond applicant is a business entity, from what parties do corporate sureties routinely require indemnity agreements? - any persons who have major financial interests in the entity he 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? READ the question fully - surety Suretyship and insurance are alike in that - Insurance commissioners regulate both. When evaluating a surety claim, claims representatives are often assisted by outside legal counsel. What other professionals assist claims representatives? - engineers Following the Civil War, the growing number and complexity of financial/commercial relationships led to the need for - commercial suretyship Designated depositories are banks approved by - A government entity and in which the official or employee should deposit public funds Which one of these statements is true regarding financial guaranty bonds? - When in place, the entire issue of these bonds would have a higher investment grade, allowing municipalities to sell their bonds at a lower interest rate. What type of miscellaneous bond do sureties often write as open penalty forms to provide for fluctuation of the value of the subject of the bond? - A lost security bond The legally mandated hazardous waste facilities performance bond - Can be posted only for hazardous waste facilities with permits, and it requires an underwriting review of the closure plan. A person who commences an action against another to obtain an equitable remedy may be required to post a bond before the court will proceed with the action. This bond is called - a plaintiff bond One type of fiduciary bond is required of an individual who has the legal responsibility for the care of a minor or a legally incompetent person or for such a person's property. This bond is called - A guardians bond. 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 Under a public official bond guaranteeing the honesty of a treasurer - He or she must account for the cash that he or she holds while in office. Public official bonds for officials who handle public funds - Guarantee losses that occur when the principal fails to follow designated depository guidelines. Bonds that are required by business entities and individuals to protect them from loss, and for which the obligation is dictated by the contract between the principal and the obligee and by the bond provisions, are - Nonstatutory bonds Which one of the these groups, for the most part, serves the market for fidelity and surety bonds in the United States? - Multiline property-casualty insurers 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 Which one of these is an accurate comparison of suretyship and banking? - Both suretyship and banking are financial relationships and deal with losses that are generally defined in monetary terms; however, a surety guarantees