AFE Accredited Financial Examiner Questions and Answers

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

What encompasses investment income and gains and losses, as well as custody of investment and recordkeeping?

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:

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:

What uses valuation techniques to convert future amounts to a single present amount?

Which projection method uses paid losses plus reserves on outstanding claims?

The evaluation and subsequent purchase or sale of investments is based on the judgment of the entity’s investment and finance committees.

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

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

Tax Act states that:

Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. The Investment Department is responsible for promptly supplying the Accounting Department with:

Financial statements of a self-sustaining foreign operation are translated using the current rate method whereby assets and liabilities are translated in the reporting currency using the exchange rate.

Dynamic hedging requires that:

To avoid double counting or omitting the effects of risks factors what should reflect assumptions that are consistent with those inherent in the cash flows?

________ are contracts with the insurer which provide for periodic payments over a specified period or in specified amounts. In most respects they are administered and accounted for much like supplementary contracts without life contingencies since there are no mortality or morbidity considerations that affect the amount to be paid.

Internal Control is:

A basic premise underlying the application of is that it is reasonable to assume that plausible relationships among data exist and continue in the absence of known conditions to the contrary.

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

Claims adjusting involve:

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

A company that has its loans serviced, for whatever reason, is usually charged a servicer’s fee. This fee is usually expressed:

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date is called:

Immunization theory says that:

Insurance policies may be classified in which of the following categories?

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

Revenue risk is defined as:

Sales of securities are recorded as of the trade date. A receivable due from the broker is established in instances when a security has been sold, but the proceeds from the sale have not been received. Receivable for securities not received within settlement date are non-admitted, and are classified as other than invested assets.

The method which assumes that an entity’s experience in estimating case-basis reserves will be repeated in the future is called:

The sum of values assigned by claims adjusters to specific known claims that were recorded by the insurance entity but not yet paid at the financial statement date is called:

Identification and documentation of the controls and policies which address the risk management issues for each of the Standards is the necessary step for:

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

The method used to account for insurance and reinsurance contracts that do not transfer insurance risk is referred to as:

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

Monetary items and non-monetary items carried at market value are translated into the reporting currency at the rate of exchange in effect on the balance sheet date under:

In many states, a claims-made insurance policy is required to:

Inflation in Defense & Cost Containment (DCC) is evaluated separately and is estimated to occur at the same rate as the rate of inflation in the losses.

Admitted assets are those specifically prescribed by the NAIC Accounting Practices and Procedures Manual or prescribed or permitted by the various jurisdictions. An admitted asset is defined as having probable future economic benefits. It also has three essential characteristics. Which one of the following is out of those characteristics?

The estimated amount receivable from third parties from whom the insured may have the right to recover damages is known as:

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