Free AFE – Accredited Financial Examiner Practice Test Question

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  They have been made out of a company’s free surplus
  

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  Mortgage loans are first liens on the property backing them. Second or third-lien mortgages typically qualify as “basket” loans
  

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  A particular entity can obtain this benefit
  

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  They record investment and number of mortgages on which interest has been reduced, and the percent the interest was reduced
  

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  Are also an asset in statutory accounting
  

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  Are usually those past the due date but in the grace period
  

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  Accounting is similar to that for deferred premiums in that only the net premiums are necessary to match the reserve liability
  

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  Only A and B
  

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  New or updated appraisals as evidence of the current value of the property
  

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  Current financial statements on the borrower or the property, if the property is income producing, as evidence of the borrower’s continuing financial strength and of the property’s continuing ability to produce income
  

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  Periodic inspection reports as evidence of the physical condition of the property
  

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  Borrower’s financial statements
  

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  The insured makes a request for a loan. Since an emergency may very well have triggered this request, most companies will accept any form of notice such as a telephone call
  

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  The maximum loan amount is frequently limited to the cash value of the policy plus the value of paid-up additions
  

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  an insured has indicated in the insurance application that the policy is not to lapse for nonpayment of premiums so long as there is loan value adequate to cover unpaid premiums
  

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  Loan can be created to pay policy loan interest if the policyholder-borrower does not pay it in cash
  

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  Losses may or may not be charged back
  

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  Losses can never be charged back
  

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  Gains are distributed according to the agreement between both the parties
  

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

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  As a cash withdrawal.
  

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  As premium applied to the purchase by the policyholder of paid-up insurance.
  

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  As marketable securities
  

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  As premium to pay up or mature the policy.
  

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  Agency does not make loans; it only insures them. For this protection the borrower must pay an annual insurance premium to the FHA of 0.5 percent of the outstanding principal amount of the loan
  

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  Agency does not make loans; upon default, the lender has the option either of assigning the mortgage to the FHA and receiving cash and/or securities equal to the loan amount at the date of the default or of foreclosing on the mortgaged property
  

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  Establishes standards for property that can not be insured and maximum terms, interest rates, and amounts for the insured loans
  

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  All of these
  

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  True
  

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  False
  

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  Integrated Audit Financial Statement
  

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  Public Company Accounting Oversight Board
  

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  Audit of Financial Reporting over Internal Control
  

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  National Association of Insurance Commission
  

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  Mortgage Loan
  

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  Real estate lending
  

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  Conventional Commercial Loans
  

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  CMBS
  

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  Numerical rating
  

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  Premium rating
  

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  Manual rating
  

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  Item rating
  

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  Operational skepticism
  

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  Audit skepticism
  

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  Professional skepticism
  

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  None of the above
  

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  Automobile equitability
  

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  Automobile insurance
  

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  Automobile assurance
  

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  None of the above
  

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  Variable annuities
  

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  Deferred annuities
  

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  Immediate annuities
  

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  None of the above
  

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  the financial position of an entity with a 2-to-1 reserve-to-surplus ratio is less affected by variability in its loss reserves than is an entity operating at 4-to-1 ratio.
  

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  the financial position of an entity with a 2-to-1 reserve-to-surplus ratio is more affected by variability in its loss reserves than is an entity operating at 4-to-1 ratio.
  

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  the financial position of an entity with a 4-to-1 reserve-to-surplus ratio is less affected by variability in its loss reserves than is an entity operating at 2-to-1 ratio.
  

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  the financial position of an entity with a 4-to-1 reserve-to-surplus ratio is more affected by variability in its loss reserves than is an entity operating at 2-to-1 ratio.