CPCU 540 2025/2026 Exam Questions
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Correct Answers
Activity within the financial markets is important to corporations. The capital
market is significant because it
Select one:
A. Provides information for accounting statements.
B. Dictates the assets needed to support the cost of capital.
C. Generally determines the cost of long-term financing.
D. Determines the amount of capital available through borrowing. - 🧠
ANSWER ✔✔C. Generally determines the cost of long-term financing.
Finance - 🧠 ANSWER ✔✔Which one of the following is described as a
discipline concerned with determining value and making decisions about
money, banking, credit, investments, and other assets?
,How would an underwriter best use a potential insured's financial
statements when underwriting the risk?
Select one:
A. To determine how much actual premium the risk can pay
B. To determine if there is any potential growth for this risk
C. To determine if the risk is committing any fraud in their operations
D. To assess the ability of the risk to make timely premium payments - 🧠
ANSWER ✔✔D. To assess the ability of the risk to make timely premium
payments
An insurance claim representative might likely use information contained in
the insured's financial statements to
Select one:
A. Determine fault after the injury to a customer.
B. Determine the cost to repair a building after a fire.
C. Determine if a moral hazard exists after a fire loss.Correct. They would
want to determine if a moral hazard exists after a fire loss.
,D. Determine if coverage exists for a damaged auto. - 🧠 ANSWER ✔✔C.
Determine if a moral hazard exists after a fire loss.
All underwriters at Wheaton Insurance are required to evaluate the clients'
assets and liabilities before renewing a policy for a retail sales company.
The underwriters use this evaluation to
A. Screen for an acceptable level of financial stability.Correct. The
underwriters use this evaluation to screen for an acceptable level of
financial stability.
B. Forecast the value of insurable inventory.
C. Evaluate the adequacy of the gross profit margin.
D. Estimate the value of non-reported inventory. - 🧠 ANSWER ✔✔A.
Screen for an acceptable level of financial stability.
Sean owns a retail men's clothing store. After a recent fire, the insurance
adjuster requested copies of the store's most recent financial statements.
The adjuster is most likely to use the statements to
Select one:
A. Estimate the inventory on hand at the date of loss.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, B. Evaluate the marketability of the inventory.
C. Forecast the store's immediate cash needs.Incorrect. The adjuster is
most likely to use the statements to estimate the inventory on hand at the
date of loss.
D. Classify the inventory loss as covered or denied. - 🧠 ANSWER ✔✔A.
Estimate the inventory on hand at the date of loss.
The analysis of a potential insured's financial statements can determine an
insurer's decisions on
Select one:
A. Underwriting.Correct. The underwriting decision about whether to insure
an account requires an analysis of the potential insured's financial
statements to determine the appropriateness of the type and amount of
coverage requested.
B. Claim handling.
C. Regulatory reporting.
D. Policy interpretation. - 🧠 ANSWER ✔✔A. Underwriting.
and Detailed Answers | Get it 100%
Correct Answers
Activity within the financial markets is important to corporations. The capital
market is significant because it
Select one:
A. Provides information for accounting statements.
B. Dictates the assets needed to support the cost of capital.
C. Generally determines the cost of long-term financing.
D. Determines the amount of capital available through borrowing. - 🧠
ANSWER ✔✔C. Generally determines the cost of long-term financing.
Finance - 🧠 ANSWER ✔✔Which one of the following is described as a
discipline concerned with determining value and making decisions about
money, banking, credit, investments, and other assets?
,How would an underwriter best use a potential insured's financial
statements when underwriting the risk?
Select one:
A. To determine how much actual premium the risk can pay
B. To determine if there is any potential growth for this risk
C. To determine if the risk is committing any fraud in their operations
D. To assess the ability of the risk to make timely premium payments - 🧠
ANSWER ✔✔D. To assess the ability of the risk to make timely premium
payments
An insurance claim representative might likely use information contained in
the insured's financial statements to
Select one:
A. Determine fault after the injury to a customer.
B. Determine the cost to repair a building after a fire.
C. Determine if a moral hazard exists after a fire loss.Correct. They would
want to determine if a moral hazard exists after a fire loss.
,D. Determine if coverage exists for a damaged auto. - 🧠 ANSWER ✔✔C.
Determine if a moral hazard exists after a fire loss.
All underwriters at Wheaton Insurance are required to evaluate the clients'
assets and liabilities before renewing a policy for a retail sales company.
The underwriters use this evaluation to
A. Screen for an acceptable level of financial stability.Correct. The
underwriters use this evaluation to screen for an acceptable level of
financial stability.
B. Forecast the value of insurable inventory.
C. Evaluate the adequacy of the gross profit margin.
D. Estimate the value of non-reported inventory. - 🧠 ANSWER ✔✔A.
Screen for an acceptable level of financial stability.
Sean owns a retail men's clothing store. After a recent fire, the insurance
adjuster requested copies of the store's most recent financial statements.
The adjuster is most likely to use the statements to
Select one:
A. Estimate the inventory on hand at the date of loss.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, B. Evaluate the marketability of the inventory.
C. Forecast the store's immediate cash needs.Incorrect. The adjuster is
most likely to use the statements to estimate the inventory on hand at the
date of loss.
D. Classify the inventory loss as covered or denied. - 🧠 ANSWER ✔✔A.
Estimate the inventory on hand at the date of loss.
The analysis of a potential insured's financial statements can determine an
insurer's decisions on
Select one:
A. Underwriting.Correct. The underwriting decision about whether to insure
an account requires an analysis of the potential insured's financial
statements to determine the appropriateness of the type and amount of
coverage requested.
B. Claim handling.
C. Regulatory reporting.
D. Policy interpretation. - 🧠 ANSWER ✔✔A. Underwriting.
