AFSB 152 EXAM (Chapters 1 - 10) Questions and Answers 100% Solved

AFSB 152 EXAM (Chapters 1 - 10) Questions and Answers 100% Solved How a typical design process works: ✔️✔️1. The design professional interviews the client and measures current and future needs 2. The design professional reviews existing facilities for potential renovation and for their ability to handle future growth needs 3. Professionals obtain required zoning approvals and ensures plans comply with government regulations 4. For new construction, the future owner either acquires an option to acquire the land or building being renovated 5. The owner obtains a building permit 6. The owner arranges financing before construction An underwriting concern with reverse flow international bonding is that: ✔️✔️The financial strength of many of the international companies resides outside of the US A limited liability company is most similar to a: ✔️✔️Subchapter S Corporation What describes the importance of supplementary data in a contractor's financial report? ✔️✔️Supplementary data is highly significant in a contractor's financial report Courts have created the surety's rights of subrogation by ruling on which one of the following actions by the surety? ✔️✔️A surety that pays under its bond may take over the recovery rights of those persons to whom or on whose behalf the surety has made payment Contractor A bid a job at $8 million. Contractor B, Contractor C, and Contractor D bid the job at $7.1 million, $7.0 million, and $6.9 million. In this case, most sureties would apply the 10 percent rule to Contractor A's bid and: ✔️✔️An average of all of the above bids What performance bond option is particularly effective in the face of a threat of "blacklisting" by a public, governmental body obligee? ✔️✔️To fund the excess cost of completion and reserve the surety's rights to sue the obligee for repayment Analyst's must inquire about any subsequent changes and determine whether they have material positive or negative effects on the analysis. The analysis should consider events and conditions in these areas: ✔️✔️- Financial performance of contracts: a variety of factors, such as project management, weather, and productivity of the labor force can affect financial performance - Mix of assets and liabilities that may change the financial structure of the contracting entity - Changes in ownership or management of the contracting entity - Litigation involving the contractor If a contractor fails to sign a contract after being awarded the bid, and the difference between the principal's bid and the next lowest bid is more than the bond penalty, then? ✔️✔️The contractor is liable for the excess amount If there is work on a highway project that requires a deep excavation and extensive pile driving, the contractor should have concerns for? ✔️✔️Damage to surrounding structures Which type of guarantees do underwriters typically consider objectionable? ✔️✔️Efficiency guarantees on the finished project that hold the contractor responsible What is the reason contractor's are required to provide bid bonds? ✔️✔️This is because obligees do not have time to review every single bidder's qualifications Benefit of Surety Bonds to Architects or Engineers: ✔️✔️The bond provides confidence that, in the surety's judgement, the contractor can translate project plans into a finished product. A contractor's ability to acquire, maintain, and successfully manage backlogs is reflected in which of these income statement results over several accounting periods? ✔️✔️Operating Profit What is a surety bond? ✔️✔️A written contract that expresses one partys promise to answer for another partys failure to do something as promised What is a surety? ✔️✔️The party to a surety bond that guarantees to the obligee that the principal will fulfill an obligation or perform as required by the underlying contract, permit, or law. What is an obligee? ✔️✔️The party to a surety bond that receives the suretys guarantee that the principal will fulfill an obligation or perform as promised What is a principal? ✔️✔️The party to a surety bond whose obligation or performance the surety guarantees What is suretyship? ✔️✔️The obligation of one entity to answer for the debt, default, or miscarriage of performance of duties by another entity What is a contract bond? ✔️✔️A surety bond guaranteeing the fulfillment of obligations under construction contracts or other types of contracts How do surety bonds affect lenders confidence in financing a construction project? ✔️✔️Lenders are more confident in extending project financing in the form of construction loans when they know that the construction risk has a surety's guarantee What are the two bonds typically required under contract bonds? ✔️✔️1. Performance bond 2. Payment bond What do performance bonds guarantee? ✔️✔️That the contractor will fulfill all terms, specifications, and conditions of a construction contract What do payment bonds guarantee? ✔️✔️That the contractor will pay labor and materials bills associated with the contract | Executed in favor of the obligee Are the bond penalties for the performance bond and payment bond exclusive of each other? ✔️✔️Yes; thus the construction project owner receives significant financial assurance beyond the contractor's financial resources What is a bid bond? ✔️✔️A contract guaranteeing that a contractor bidding on a construction or supply contract will enter into the contract and will provide a performance bond if the bid is accepted Benefits of Surety Bonds for Owners: ✔️✔️- Financial assurance that a contractor will undertake and complete the owners contract once awarded it (bid bond) - confidence that all parties involved in the contract will fulfill their duties (performance bond) - confidence that the contractor will pay labor and material bills associated with the contract (payment bond) - Owner receives significant financial assurance beyond the contractor's financial resources - benefit from the additional security knowing the contractor has satisfied the surety's comprehensive prequalification review.