SOFE SOFE Certifications AFE Questions & Answers

• Question 191:

  Reinsurance is defines as:

  A. to pay another party to assume a stream of contingent expenses, for a premium over the expected cost

  B. to pay another party to assume a stream of contingent revenues, for an interest over the expected cost

  C. to sell another party to assume a stream of contingent assets, for a premium over the actual cost

  D. to sell another party to assume a stream of contingent expenses, for a discount over the expected cost

  Correct Answer: A

• Question 192:

  Traditional insurance risks are generally are random and average out over larger populations.

  A. Systematic

  B. Nonsystematic

  C. Dynamic

  D. Productive

  Correct Answer: B

• Question 193:

  What is largely systematic that is; all insured risks are strongly affected by certain common influences, like developments in the capital markets?

  A. Performance risk

  B. Non-investment risk

  C. Investment risk

  D. Productive risk

  Correct Answer: C

• Question 194:

  What may leave more risk than a company should prudently assume due to the risk exacerbating features of a particular product?

  A. Feasible investment strategy

  B. Design strategy

  C. Risk strategy

  D. Product risk strategy

  Correct Answer: A

• Question 195:

  What is derived from its future cash flows, adjusted for risk as well as any other relevant economic characteristics?

  A. Financial value

  B. Future cost value

  C. Liability fair value

  D. Statutory cost value

  Correct Answer: C

• Question 196:

  What are especially effective in investment strategy, because of the powerful risk management attributes they provide?

  A. Investments trials

  B. Product design

  C. Communication benefits

  D. Derivative instruments

  Correct Answer: D

• Question 197:

  The purest representation of asset/liability dynamics is instead through ____________, which measure assets and liabilities according to the cash flows they generate.

  A. Significant changes

  B. economic values

  C. Diversify property

  D. Deliberate bias

  Correct Answer: B

• Question 198:

  Revenue risk is defined as:

  A. the general administrative costs of insurers include components that do not necessarily vary with the level of the equity markets

  B. the general administrative costs of investors include components that must necessarily vary with the level of the equity markets

  C. the particular administrative costs of insurers include components that must necessarily vary with the level of the equity markets

  D. the general administrative costs of investors include components that do not vary with the level of the equity markets

  Correct Answer: A

• Question 199:

  What is characterized by liabilities "shorter" than assets, which can lead to the liquidation of assets at depressed values in times of higher than expected interest rates?

  A. Reinvestment risk

  B. Actual interest risk

  C. Capital value risk

  D. None of the above

  Correct Answer: C

• Question 200:

  Savvy sales agents, acting in the interests of their clients, instigate surrenders of the original policies and placement with the new insurers, this phenomenon is known as:

  A. Opportunistic act

  B. Contractual minimums

  C. Mortgage backed securities

  D. Disintermediation.

  Correct Answer: D