SOFE SOFE Certifications AFE Questions & Answers

• Question 171:

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

  A. True

  B. False

  Correct Answer: A

• Question 172:

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

  A. less than 50 percent

  B. more than 65 percent

  C. more than 75 percent

  D. less than 80 percent

  Correct Answer: C

• Question 173:

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

  A. Insurance resting (IT)

  B. Dynamic solvency testing (DST)

  C. Financial testing (AT)

  D. Adequacy testing (AT)

  Correct Answer: B

• Question 174:

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

  A. Regulation of Insurer Financial Disclosure

  B. Regulation of Insurer Investment Activity

  C. Regulation of Insurer Reserve Adequacy

  D. Regulation of Insurer Asset Adequacy

  Correct Answer: A

• Question 175:

  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:

  A. Forward investment plan

  B. Future agreement plan

  C. Future Contract

  D. Forward Contract

  Correct Answer: D

• Question 176:

  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. Sell Option

  B. Call Option

  C. Buy Option

  D. None of the above

  Correct Answer: B

• Question 177:

  Put Option is:

  A. A procedure that grants the holder the right but not the obligations to buy the main asset at the specified market price.

  B. A strategy that grants the holder the right to sell the underlying asset at the actual price.

  C. An instrument that grants the holder the right but not the obligations to sell the underlying asset at the specified strike price.

  D. An activity that grants the holder the right to put obligations to the underlying asset at the specified strike price.

  Correct Answer: C

• Question 178:

  ________________ 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. Future decision

  B. Future agreement

  C. Future contract

  D. Future cost plan

  Correct Answer: A

• Question 179:

  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

  Correct Answer: A

• Question 180:

  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

  Correct Answer: B