AFE Exam Questions

Immunization theory says that:

What is the second-order measure of the interest rate sensitivity of an instrument and the sensitivity of duration to changes in interest rates?

Interest rates are a key element of any option pricing exercise because cash flows are discounted at interest.

Quantifies the sensitivity of the option price to changes in interest rates is known as:

Which of the following is NOT of equity market sensitivities that are usually considered in dynamic hedging?

Which counterparts of duration and convexity are the first- and second-order sensitivities of an equity market instrument to changes in the price of the underlying?

Dynamic hedging requires that:

______ is an agreement between two counterparties to enter into a particular transaction at a specified date in the future at an agreed-upon price.

An instrument that grants the holder the right but not the obligation to buy the underlying asset at a specified strike price is known as:

A private agreement to buy or sell a given quantity of an asset such as a currency, interest rate or commodity at a specified future date at a specified price is called:

Which of the following is NOT the Asset/ Liability Management (ALM) activity?

A holistic analysis in a multi-scenario framework of all significant factors that can affect an insurer's future financial condition is called:

A metric is a measurement standard or yardstick for quantifying Asset/Liabilities Management (ALM) risk.

The ten largest companies account for what percent of life insurance sales in Canada?

Which of the following is NOT the category of Life and health insurers in Canada?

Which of the following is the significant requirement for ongoing regulatory reporting to the Office of the Superintendent of Financial Institutions ("OSFI")?

_______ include financial statements and notes, both on a consolidated and non-consolidated basis.

What of the life insurer's is determined by applying factors for risk components to specific on and off-balance sheet assets or liabilities and by adding the results?

What is the act in which the main sections are for Canadian companies and for foreign companies?

The approach in which the investment policy should "identify acceptable ranges for investments in different types of instruments, including cash, equities, bonds and debentures, an...

Investments in equities by a life insurance company may not exceed the total of

A substantial investment is defined as any investment comprising more than 15 percent of an enterprise's voting shares or greater than 35 percent of its equity.

The Appointed Actuary has a responsibility to express an opinion on the appropriateness of certain actuarially determined amounts in the financial statements.

The nature and extent of interest rate risk, credit risk, reinsurance risk and other significant risks should be disclosed is required for:

______________ is considered to be self-sustaining if it is financially and operationally independent of the reporting enterprise.

Principal objectives of state statutes are: to investigate and settle some or all of the

The reason behind, when an insurance entity may request permission from the domiciliary state regulatory authority to use a specific accounting practice in the preparation of its s...

Short-duration contracts provide insurance protection for fixed period and can cancel the contract at the end of any contract period.

The contracts that are not subject to unilateral changes in its provision and requires the performance of various functions and services for an extended period is called:

SAP stresses measurement of emerging earnings of a business from period to period while GAAP stresses measurement of the ability to pay claims in the future.

Audit risk consists of:

The maximum error in the population that the auditor is willing to accept is called:

Which risk assessment procedures are used to obtain an understanding of the entity and its environment, including its internal control?

The profitability of an insurance entity on a statutory basis is generally gauged by:

The combined ratio is the sum of it:

The operating ratio is the combined ratio less than the ratio of investment income, to earned premiums.

The auditor should obtain a sufficient understanding by performing risk assessment procedures to:

A process designed to provide reasonable assurance about the achievement of the entity's objectives with regard to reliability of financial reporting, effectiveness and efficiency...

Which of the following is NOT the interrelated component of internal control?

Which control includes the procedures for system design, including the acquisition of software packages, should encourage active participation by the accounting department and inte...

Final approval should be obtained prior to placing a new system into operation is the activity that can be fall into which control?

An attitude that includes a questioning mind and a critical assessment of audit evidence is called:

Which are the types of misstatements relevant to the auditor's consideration of fraud in a financial statement audit?

Which of the following may NOT involve a high degree of management judgment and subjectivity and may present risks of material misstatement due to fraud?

An estimate due to time lags in the receipt of reports from cendants is called reinsurance.

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

The Module Rule requires the insurer to provide:

The SEC rules clarify that management's assessment and report is limited to internal control over financial reporting.

Audit regulatory is more reliable when it is obtained from knowledgeable independent sources inside the entity.

is provided by original documents is more reliable than audit evidence provided by photocopies or facsimiles.