AFSB 153 FINAL EXAM 2 QUESTIONS WITH SOLUTIONS
2025 GRADED A+
✔✔The relationship between the principal and surety on schedule bonds differs from
that relationship on individual bonds because
a. The principals on individual bonds must indemnify the surety in the event of a bond
loss, while principals on schedule bonds are not required to indemnify the surety.
b. The principals on a schedule bond do not sign the bond form, so they do not
personally enter into the contract, even though they are bonded.
c. The protection provided by the schedule bond of a public official's subordinates
increases the liability assumed under the individual public official's bond.
d. All of the above - ✔✔b. The principals on a schedule bond do not sign the bond form,
so they do not personally enter into the contract, even though they are bonded.
✔✔All of the following are categories of public official bonds that relate to the
officeholder's responsibility, EXCEPT:
a. Officials who do not handle money, including administrative officers
b. Peace-keeping officers and other public safety officers
c. Professional fundraisers who collect money for public works
d. Money-handling public officials - ✔✔c. Professional fundraisers who collect money for
public works
✔✔Which one of the following claim issues applies to federal official bonds?
a. Courts interpret surety-drafted bond forms according to the government's intent rather
than the form language supplied by the surety.
b. The statute of limitations on the government's right to sue the surety for losses begins
when the official is replaced by a new official.
c. To file a bond lawsuit, the government must file within three years against the
sureties of all officials and employees.
d. If the officials or employees leave office without submitting a final statement or
account settlement, the government cannot sue the surety for bond losses at any time. -
✔✔a. Courts interpret surety-drafted bond forms according to the government's intent
rather than the form language supplied by the surety.
✔✔A surety's general guarantee under a court bond is
a. To prevent obstruction of justice in civil and criminal proceedings.
b. To ensure that the government will be reimbursed for all expenses related to legal
proceedings and operation of the court system.
c. To ensure that principals will fulfill their obligations as prescribed by law or a court or
to show financial responsibility for the benefit of another.
d. All of the above - ✔✔c. To ensure that principals will fulfill their obligations as
prescribed by law or a court or to show financial responsibility for the benefit of another.
✔✔All of the following are desirable underwriting features found in financial statements,
EXCEPT:
, a. Net worth equal to or greater than net working capital
b. Low working capital and evidence of positive payment history
c. Absence of substantial long-term debt
d. Net working capital equal to the bond exposure - ✔✔b. Low working capital and
evidence of positive payment history
✔✔Collateral might be posted on a judicial bond because of financial insufficiency,
because of the term of the bond, or
a. To cover indirect claim costs from principals facing bankruptcy.
b. When the government requires collateral for that type of bond.
c. When the principal volunteers it to reduce premium costs.
d. As required by the court of jurisdiction over the matter. - ✔✔c. When the principal
volunteers it to reduce premium costs.
✔✔Sureties generally pay damages claimed in judicial bond losses
a. That exceed the penal sum of the bond because the principal is generally liable for
such sums.
b. That an unjustly restrained party suffers during the period of restraint or during the
principal's unjust enrichment.
c. Including all punitive damages assessed against the principal for any cause.
d. Except loss of perishable goods or lost income that results when property is seized. -
✔✔b. That an unjustly restrained party suffers during the period of restraint or during the
principal's unjust enrichment.
✔✔Some courts require bonds similar to replevin bonds such as
a. Forthcoming bonds.
b. Garnishment bonds.
c. Supersedeas bonds.
d. Certiorari bonds. - ✔✔a. Forthcoming bonds.
✔✔Parties that are likely to obtain condemnation bonds include
a. Private developers and building contractors.
b. Railroads, telephone companies, and other public utilities.
c. Executors and administrators.
d. Conglomerate financial and investment corporations. - ✔✔b. Railroads, telephone
companies, and other public utilities.
✔✔For which one of the following reasons did maritime law impose a limitation of
liability on certain admiralty bonds?
a. To promote investment in shipping by shipowners and operators
b. To advance the use of commercial surety bonds for admiralty
c. To prevent shipowners from overloading their ships and making surety bond claims
for jettisoned cargo
d. None of the above - ✔✔a. To promote investment in shipping by shipowners and
operators
2025 GRADED A+
✔✔The relationship between the principal and surety on schedule bonds differs from
that relationship on individual bonds because
a. The principals on individual bonds must indemnify the surety in the event of a bond
loss, while principals on schedule bonds are not required to indemnify the surety.
b. The principals on a schedule bond do not sign the bond form, so they do not
personally enter into the contract, even though they are bonded.
c. The protection provided by the schedule bond of a public official's subordinates
increases the liability assumed under the individual public official's bond.
d. All of the above - ✔✔b. The principals on a schedule bond do not sign the bond form,
so they do not personally enter into the contract, even though they are bonded.
✔✔All of the following are categories of public official bonds that relate to the
officeholder's responsibility, EXCEPT:
a. Officials who do not handle money, including administrative officers
b. Peace-keeping officers and other public safety officers
c. Professional fundraisers who collect money for public works
d. Money-handling public officials - ✔✔c. Professional fundraisers who collect money for
public works
✔✔Which one of the following claim issues applies to federal official bonds?
a. Courts interpret surety-drafted bond forms according to the government's intent rather
than the form language supplied by the surety.
b. The statute of limitations on the government's right to sue the surety for losses begins
when the official is replaced by a new official.
c. To file a bond lawsuit, the government must file within three years against the
sureties of all officials and employees.
d. If the officials or employees leave office without submitting a final statement or
account settlement, the government cannot sue the surety for bond losses at any time. -
✔✔a. Courts interpret surety-drafted bond forms according to the government's intent
rather than the form language supplied by the surety.
✔✔A surety's general guarantee under a court bond is
a. To prevent obstruction of justice in civil and criminal proceedings.
b. To ensure that the government will be reimbursed for all expenses related to legal
proceedings and operation of the court system.
c. To ensure that principals will fulfill their obligations as prescribed by law or a court or
to show financial responsibility for the benefit of another.
d. All of the above - ✔✔c. To ensure that principals will fulfill their obligations as
prescribed by law or a court or to show financial responsibility for the benefit of another.
✔✔All of the following are desirable underwriting features found in financial statements,
EXCEPT:
, a. Net worth equal to or greater than net working capital
b. Low working capital and evidence of positive payment history
c. Absence of substantial long-term debt
d. Net working capital equal to the bond exposure - ✔✔b. Low working capital and
evidence of positive payment history
✔✔Collateral might be posted on a judicial bond because of financial insufficiency,
because of the term of the bond, or
a. To cover indirect claim costs from principals facing bankruptcy.
b. When the government requires collateral for that type of bond.
c. When the principal volunteers it to reduce premium costs.
d. As required by the court of jurisdiction over the matter. - ✔✔c. When the principal
volunteers it to reduce premium costs.
✔✔Sureties generally pay damages claimed in judicial bond losses
a. That exceed the penal sum of the bond because the principal is generally liable for
such sums.
b. That an unjustly restrained party suffers during the period of restraint or during the
principal's unjust enrichment.
c. Including all punitive damages assessed against the principal for any cause.
d. Except loss of perishable goods or lost income that results when property is seized. -
✔✔b. That an unjustly restrained party suffers during the period of restraint or during the
principal's unjust enrichment.
✔✔Some courts require bonds similar to replevin bonds such as
a. Forthcoming bonds.
b. Garnishment bonds.
c. Supersedeas bonds.
d. Certiorari bonds. - ✔✔a. Forthcoming bonds.
✔✔Parties that are likely to obtain condemnation bonds include
a. Private developers and building contractors.
b. Railroads, telephone companies, and other public utilities.
c. Executors and administrators.
d. Conglomerate financial and investment corporations. - ✔✔b. Railroads, telephone
companies, and other public utilities.
✔✔For which one of the following reasons did maritime law impose a limitation of
liability on certain admiralty bonds?
a. To promote investment in shipping by shipowners and operators
b. To advance the use of commercial surety bonds for admiralty
c. To prevent shipowners from overloading their ships and making surety bond claims
for jettisoned cargo
d. None of the above - ✔✔a. To promote investment in shipping by shipowners and
operators
