AFE Exam Questions
190 real AFE exam questions with expert-verified answers and explanations. Page 1 of 4.
- Question #1
An annuity contract provides:
- Question #2
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...
- Question #3
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...
- Question #4
A stock life insurance company writing both participating and nonparticipating business must follow special accounting procedures under the laws of certain jurisdictions. The purpo...
- Question #5
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...
- Question #6
The Annual Statement reporting requirements for the participating and nonparticipating branches is limited to major and secondary lines of business, but a company would:
- Question #7
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...
- Question #8
What is the purpose of consolidated financial statements?
- Question #9
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...
- Question #10
All operations under common control are combined, intercompany balances and transactions are eliminated and the effects of minority interests are recorded through:
- Question #11
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:
- Question #12
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...
- Question #13
What represent the ownership interests in the net assets of the subsidiary held by persons outside the controlling entities' structure?
- Question #14
Permanent stockholders' equity represents an outside claim (from the permanent stockholders' perspective) on the net assets of a subsidiary.
- Question #15
An entity method is applied to corporate joint ventures and to investments in certain less than majority-owned companies in circumstances where:
- Question #16
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...
- Question #17
It usually is acceptable to use the subsidiary's statements if the difference in fiscal periods is:
- Question #18
Which of the following is NOT included when initial acquisition of Subsidiary, Controlled and Affiliated Entities (SCA) is recorded as the sum of?
- Question #19
The name of each Subsidiary, Controlled and Affiliated (SCA) entity and percentage of ownership of common stock must be put to disclosure when:
- Question #20
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:
- Question #21
What is considered "pure" mortality protection?
- Question #22
What usually features a fixed premium that acts to levelize the policyholder's outlay over the lifetime of the policy?
- Question #23
What features a reserve that accumulates at company declared credited interest rates, which are periodically reset?
- Question #24
What funnels premium dollars into separate accounts which means segregated pools of bonds or stocks?
- Question #25
What are designed primarily to accumulate a fund for eventual liquidation via annuitization, so the savings element is predominant?
- Question #26
With fixed deferred annuities;
- Question #27
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.
- Question #28
The two major asset classes in which life insurers invest are:
- Question #29
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?
- Question #30
Asset-Liability Management recognizes that the financial impact of an asset or liability is mainly realized through its:
- Question #31
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.
- Question #32
For immediate annuities, this is the __________ defined by the sequence of periodic annuity benefit payments the policyholder is promised.
- Question #33
From what the most direct value-based requirements arise which are present in account value accumulation products?
- Question #34
The potential for loss resulting from changes in market interest rates are known as:
- Question #35
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...
- Question #36
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?
- Question #37
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:
- Question #38
Revenue risk is defined as:
- Question #39
The purest representation of asset/liability dynamics is instead through ___________ which measure assets and liabilities according to the cash flows they generate.
- Question #40
What is derived from its future cash flows, adjusted for risk as well as any other relevant economic characteristics?
- Question #41
What are especially effective in investment strategy, because of the powerful risk management attributes they provide?
- Question #42
What may leave more risk than a company should prudently assume due to the risk exacerbating features of a particular product?
- Question #43
Traditional insurance risks are generally are random and average out over larger populations.
- Question #44
What is largely systematic that is; all insured risks are strongly affected by certain common influences, like developments in the capital markets?
- Question #45
Selling a stream of contingent revenues to another party, at a discount to the expected value is called:
- Question #46
Reinsurance is defines as:
- Question #47
What seeks to identify and exploit existing or potential synergies in a company's diverse business activities?
- Question #48
What compare the hypothesized interest rate sensitivities and shows that the two lines of business are fairly complementary?
- Question #49
Duration is a measure of the first-order interest rate sensitivity of a financial instrument.
- Question #50
By quantifying interest rate sensitivity, investment risk and can also indicate corrective actions.