Accredited Financial Examiner (AFE) Practice Test

Questions # 71:

A lower net retention level typically would translate into a higher v\variability of reserves.

Options:

True

False

Questions # 72:

The private pools can fall in which two categories:

Options:

Risk retention and sale groups

Risk retention and purchasing groups

Public and purchasing groups

None of the above

Questions # 73:

The organizations in which the ownership and control of operations are vested in the policyholders are known as:

Options:

Private entities

Public entities

Reciprocal entities

Mutual entities

Questions # 74:

All operations under common control are combined, intercompany balances and transactions are eliminated and the effects of minority interests are recorded through:

Options:

Managed transactions

Controlled investment

Consolidation

Monitory control

Questions # 75:

What is considered “pure” mortality protection?

Options:

Life insurance

Premium plan

Transience policy

Assurance plan

Questions # 76:

The auditor responds to risks of material misstatements due to fraud in which of the following ways?

Options:

a response that has an overall effect on how the audit is conducted

a response to identified risks involving the nature, timing and extent of auditing procedures to be performed

a response involving the performance of certain procedures to further address the risk of material misstatement due to fraud involving management override of controls.

All of the above

Questions # 77:

What represent the ownership interests in the net assets of the subsidiary held by persons outside the controlling entities’ structure?

Options:

External control

Minority interests

Permanent stockholder

None of the above

Questions # 78:

Experience refund provisions of group insurance contracts are most often concerned with the manner of distributing any profits between the insurer and the insured group. The agreements usually contain provisions specifying how losses will affect the profit allocations for the insured group. In such situation:

Options:

Losses may or may not be charged back

Losses can never be charged back

Gains are distributed according to the agreement between both the parties

If charged back, losses for each group are usually accumulated for a certain number of years

Questions # 79:

Internal Control is:

Options:

the process of controlling the impact of risk related events on a company

the process of planning the processes in order to avoid risk related events to a company

the process of designing the models to avoid risk related events on a company

All of the above

Questions # 80:

Selling a stream of contingent revenues to another party, at a discount to the expected value is called:

Options:

Prioritized investment

Reinsurance

Profit

Securitization.

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