AFE Exam Questions

An annuity contract provides:

It refers to items such as interest paid on proceeds from the date due to the data actually disbursed, and to interest on premium deposit funds. These interest items are reflected...

To meet information al demands, internal management reporting will entail alternate views of the organization's financial performance. These areas, or views, are including all of t...

A stock life insurance company writing both participating and nonparticipating business must follow special accounting procedures under the laws of certain jurisdictions. The purpo...

Schedule H retains the identity of the Group Accident and Health and the Credit Accident and Health lines of business. However, in Schedule H the line of business designated as Oth...

The Annual Statement reporting requirements for the participating and nonparticipating branches is limited to major and secondary lines of business, but a company would:

GAAP have two important functions. First, they provide a set of standards that endeavor to measure with reasonable accuracy the assets held, liabilities owed, revenue earned, and e...

What is the purpose of consolidated financial statements?

Per Generally Accepted Accounting Principles (GAAP), the four methods for reporting the results of operations and financial position of a subsidiary (investee) by a parent (investo...

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

There is pending litigation concerning the acquisition of a subsidiary and it is probable such litigation will result in its divestiture is an example of:

According to Securities and Exchange Commission (SEC), "the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person...

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

Permanent stockholders' equity represents an outside claim (from the permanent stockholders' perspective) on the net assets of a subsidiary.

An entity method is applied to corporate joint ventures and to investments in certain less than majority-owned companies in circumstances where:

Which are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to a...

It usually is acceptable to use the subsidiary's statements if the difference in fiscal periods is:

Which of the following is NOT included when initial acquisition of Subsidiary, Controlled and Affiliated Entities (SCA) is recorded as the sum of?

The name of each Subsidiary, Controlled and Affiliated (SCA) entity and percentage of ownership of common stock must be put to disclosure when:

The difference between the carrying value of the parent's investment in subsidiary and the amount received is treated as a gain or loss in the:

What is considered "pure" mortality protection?

What usually features a fixed premium that acts to levelize the policyholder's outlay over the lifetime of the policy?

What features a reserve that accumulates at company declared credited interest rates, which are periodically reset?

What funnels premium dollars into separate accounts which means segregated pools of bonds or stocks?

What are designed primarily to accumulate a fund for eventual liquidation via annuitization, so the savings element is predominant?

With fixed deferred annuities;

The magnitude of the variable annuity benefits provided by a deferred annuity depends on the size of the account value at the end of the accumulation phase.

The two major asset classes in which life insurers invest are:

What give the issuer the right to retire the bond at certain times, typically if prevailing market interest rates fall below the rate on the bond?

Asset-Liability Management recognizes that the financial impact of an asset or liability is mainly realized through its:

The return on an instrument over a period of time is a combination of the cash flow it generates and the change in its value.

For immediate annuities, this is the __________ defined by the sequence of periodic annuity benefit payments the policyholder is promised.

From what the most direct value-based requirements arise which are present in account value accumulation products?

The potential for loss resulting from changes in market interest rates are known as:

A mismatch in the timing of asset maturities relative to policy benefits requiring either reinvestment or disinvestment by the insurer at uncertain future interest rates is known a...

What is characterized by liabilities "shorter" than assets, which can lead to the liquidation of assets at depressed values in times of higher than expected interest rates?

Solvy sales agents, acting in the interests of their clients, instigate surrenders of the original policies and placement with the new insurers, this phenomenon is known as:

Revenue risk is defined as:

The purest representation of asset/liability dynamics is instead through ___________ which measure assets and liabilities according to the cash flows they generate.

What is derived from its future cash flows, adjusted for risk as well as any other relevant economic characteristics?

What are especially effective in investment strategy, because of the powerful risk management attributes they provide?

What may leave more risk than a company should prudently assume due to the risk exacerbating features of a particular product?

Traditional insurance risks are generally are random and average out over larger populations.

What is largely systematic that is; all insured risks are strongly affected by certain common influences, like developments in the capital markets?

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

Reinsurance is defines as:

What seeks to identify and exploit existing or potential synergies in a company's diverse business activities?

What compare the hypothesized interest rate sensitivities and shows that the two lines of business are fairly complementary?

Duration is a measure of the first-order interest rate sensitivity of a financial instrument.

By quantifying interest rate sensitivity, investment risk and can also indicate corrective actions.