AFE Online Practice Questions and Answers

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

A. Whole life insurance

B. Permanent life insurance

C. Fiscally examined insurance

D. Life time insurance

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

A. Variable annuities

B. Deferred annuities

C. Immediate annuities

D. None of the above

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?

A. Delta and gamma

B. Gamma and theta

C. Theta and rho

D. Alpha and Vega

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.

A. True

B. False

Home office record-maintenance methods may include:

A. duplication of branch records

B. maintenance of detailed entries for analytical purposes

C. use of planning procedures from main office for both premiums and cash

D. All of the above

Primary coverage involves policies written between an insurer and a customer directly.

A. True

B. False

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

A. reduction for subrogation

B. reduction for salvation

C. reduction for damages

D. reduction for paid losses

Short-term portfolios are:

A. Portfolios consisting of liabilities with maturities of one year to meet dollar needs.

B. Portfolios consisting of combined revenues of less than one year to meet liquidity needs.

C. Portfolios consisting of assets with maturities of less than one year to meet liquidity needs.

D. Portfolios consisting of expenses with maturities of less than or equal to one year to meet dollar needs.

Dollar rolls differ from regular repurchase agreements due to which of the following characteristics in the securities sold and repurchased.

A. they are represented by different certificates

B. they are collateralized by different but similar mortgage pools

C. they generally have different principal amounts

D. All of the above

In what, securities involve in repos are not delivered on the settlement date of the agreement and the contract may be extended upon mutual agreement of the buyer-lender and seller-borrower.

A. Financial servicing

B. Price-cap

C. Rollover

D. Purchasing agreements