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SOFE AFE - Accredited Financial Examiner

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Page: 7 / 9
Total 286 questions

Financial Statements provide additional valuable information on the loans. Some of the more significant information provided includes EXCEPT:

A.

The valuation of the mortgage loan portfolio, including a description of the valuation basis for mortgage loans and income recognition

B.

The recorded investment and interest past due on mortgages with interest more than 90 days past due

C.

The recorded investment and number of mortgages on which interest has been reduced, and the percent the interest was reduced

D.

Disclosures of impaired loans: The total recorded investment in impaired loans at the end of each period

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:

A.

face value

B.

fair value

C.

market value

D.

transaction value

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

A.

restrict investments of insurance entities

B.

prescribe methods of admitted asset recovery

C.

acquisition of risk-based capitals

D.

Both B & C

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:

A.

Accounting data on new loans

B.

Resolving few exceptions reported to it by the Accounting Department, i.e., when a borrower defaults on a loan payment

C.

Data related to changes in existing loans, which affects the accounting function

D.

Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs

Dynamic hedging requires that:

A.

the price or value sensitivities of the hedge portfolio and the assets are in alignment

B.

the price or value sensitivities of the hedge portfolio and the liabilities are in alignment

C.

the price or value sensitivities of the hedge portfolio and the expenses are in alignment

D.

the price or value sensitivities of the hedge portfolio and the revenues are in alignment

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

A.

For all investments in SCA entities that exceed 20 percent of the total admitted expenses of the insurer.

B.

For all investments in SCA entities that exceed 15 percent of the total admitted liabilities of the insurer.

C.

For half of the investments in SCA entities that exceed 6 percent of the total admitted assets of the insurer.

D.

For all investments in SCA entities that exceed 10 percent of the total admitted assets of the insurer.

With traditional whole life insurance:

A.

an interest rate on reserves is implicit in the premium rate and is unlocked at time of policy issuance

B.

an expense rate on reserves is explicit on the premium rate and is locked in at time of policy issuance

C.

an interest rate on reserves is implicit in the premium rate and is locked in at time of policy issuance

D.

a debt rate on reserves is implicit in the premium rate and is unlocked at time of policy issuance

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.

A.

True

B.

False

For purposes of establishing an appropriate financial statement reserve, the most important factors to consider are:

A.

the historical adequacy

B.

consistency in the reserving approach

C.

availability of statistical analysis of reserves

D.

All of the above

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 of operations is called:

A.

External control

B.

Internal auditing

C.

Internal control

D.

None of the above