SOFE SOFE Certifications AFE Questions & Answers

• Question 151:

  Most life insurance companies that are taxable in Canada fall into which one of the following classifications:

  A. Domestic life insurance companies

  B. Multinational life insurance companies resident in Canada

  C. Nonresident life insurance companies operating in Canada through a branch

  D. All of the above

  Correct Answer: D

• Question 152:

  In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:

  A. source of financing

  B. nature of outputs

  C. price drivers

  D. location of the market

  Correct Answer: B

• Question 153:

  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.

  A. True

  B. False

  Correct Answer: A

• Question 154:

  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:

  A. Dependency method

  B. Equity method

  C. Temporal method

  D. Cash inflow/outflow method

  Correct Answer: C

• Question 155:

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

  A. Actuarial revenues

  B. Actuarial assets

  C. Actuarial liabilities

  D. Actuarial expenses

  Correct Answer: C

• Question 156:

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

  A. Retrocession

  B. Reinsurance

  C. Portfolio Investments

  D. Foreign operation

  Correct Answer: D

• Question 157:

  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

  Correct Answer: B

• Question 158:

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

  A. True

  B. False

  Correct Answer: A

• Question 159:

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

  A. 70 percent of the insurance company's regulatory capital

  B. 15 percent of the liabilities in respect of non-participating policies

  C. 25 percent of the liabilities in respect of participating policies

  D. All of the above

  Correct Answer: D

• Question 160:

  The approach in which the investment policy should "identify acceptable ranges for investments in different types of instruments, including cash, equities, bonds and debentures, and real property is known as:

  A. Prudent Person Approach

  B. Cash Outflow Approach

  C. Regular investment Approach

  D. Asset requisition Approach

  Correct Answer: A