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SOFE
AFE Designation
AFE
Accredited Financial Examiner Questions and Answers

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Questions # 11:

The deduction must be based on identification of specific doubtful amounts and is limited to the maximum of doubtful debts identified in the year or a preceding year and 75 percent of the amount reported for statutory purposes.

Options:

True

False

Answer

Questions # 12:

Dynamic hedging requires that:

Options:

the price or value sensitivities of the hedge portfolio and the assets are in alignment

the price or value sensitivities of the hedge portfolio and the liabilities are in alignment

the price or value sensitivities of the hedge portfolio and the expenses are in alignment

the price or value sensitivities of the hedge portfolio and the revenues are in alignment

Answer

Questions # 13:

Reduction for salvage is:

Options:

the estimated amount payable by the vendor from the disposition of damaged or recovered property

the actual amount receivable by the claimer from the temperament of damaged property

the actual amount payable by the investor from the disposition of damaged or recovered property

the estimated amount receivable by the insurer from the disposition of damaged or recovered property

Answer

Questions # 14:

For Generally Accepted Accounting Principles (GAAP), the four methods for reporting the results of operations and financial position of a subsidiary (investee) by a parent (investor) are:

Options:

Renovation, Equity Basis, Market, Cost

Consolidation, Equity Basis, Market, Cost

Equity Basis, Market, Cost, Time

Market, Cost, Performance, Time

Answer

Questions # 15:

In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:

Options:

source of financing

nature of outputs

price drivers

location of the market

Answer

Questions # 16:

A change in _______ or its application is appropriate if the change results in a measurement that is equally or more representative of fair value in the circumstances.

Options:

Valuation technique

Value technique

Investment approach

Accounting corrections

Answer

Questions # 17:

Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. The Investment Department is responsible for promptly supplying the Accounting Department with:

Options:

Accounting data on new loans

Resolving few exceptions reported to it by the Accounting Department, i.e., when a borrower defaults on a loan payment

Data related to changes in existing loans, which affects the accounting function

Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs

Answer

A, B

Questions # 18:

Mutual entities, reciprocal or inter-insurance exchanges, public entity risk pools are all principal kinds of:

Options:

Property and expense insurance organizations

Feasibility and performance assurance organizations

Property and liability insurance organizations

Building and asset related organizations

Answer

Questions # 19:

Scope of Examination and Report of Independent Certified Public Accountant states that:

Options:

the insurer shall also require that the independent certified public accountant subject the data used by the appointed actuary to testing procedure.

the insurer shall also require that the group of certified public accountant subject the data used by the appointed actuary to planning procedure.

the investor shall also require that the independent certified private accountant subject the data used by the appointed actuary to developing procedure.

the investor shall also require that the independent certified public accountant subject the data used by the appointed actuary to maintaining procedure.

Answer

Questions # 20:

Schedule rating:

Options:

starts with a real standard, frequently the judgmental rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

starts with an assumed standard, frequently the manual rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

starts with an assumed standard, frequently the class rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

starts with a real standard, frequently the individual rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

Answer

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