AFSB 151 Practice Exam Questions & Answers Graded To Pass!!
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Course
AFSB 151
Institution
AFSB 151
AFSB 151 Practice Exam Questions & Answers Graded To Pass!!
Any promise to answer for another person's debts or defaults, including the promise that a surety makes to the obligee under a bond, derives from which one of these?
Statutes of frauds
Following the Civil War, the growing number and c...
AFSB 151 Practice Exam Questions & Answers
Graded To Pass!!
Any promise to answer for another person's debts or defaults, including the
promise that a surety makes to the obligee under a bond, derives from which one
of these?
Statutes of frauds
Following the Civil War, the growing number and complexity of
financial/commercial relationships led to the need for
Commercial suretyship.
In accordance with a contract to build a county shed for the Village of Malcom,
Raymone Construction purchases a contract surety bond from SureRite
Insurance. Identify the principal, obligee, and surety in this suretyship.
Principal--Raymone Construction; obligee--Village of Malcom; Surety--SureRite
Insurance
The two basic types of bonds that are written today are
Contract surety bonds and commercial surety bonds
Sureties use what written document to authorize a producer to act as the surety's
agent in bond production?
A power of attorney
When evaluating a surety claim, claims representatives are often assisted by
outside legal counsel. What other professionals assist claims representatives?
Engineers
Suretyship and banking are alike in that
Neither expects to suffer a loss
Suretyship and insurance are alike in that
Insurance commissioners regulate both.
In the surety bond three-party relationship, the party who is primarily responsible
for fulfilling the obligation and who typically has control of the obligation is the
Principal
Because most bonds are "joint and several liability" documents, the obligee can
recover losses from
The principal or the surety, or from both.
A financial guarantee differs from performance and fidelity guarantees because it
requires honesty, the ability to perform the contract, and
The ability to pay money to meet the contractual obligation.
Instead of holding a principal's assets as security, a surety might choose to hold
an instrument issued by a commercial bank for the principal, but with the surety
named as the beneficiary. What is this instrument?
An irrevocable standby letter of credit
A type of reinsurance transaction that involves an agreement between the
primary insurer and the reinsurer specifying how to transfer risks, that defines
the eligible risks in terms of lines and classes of business, that specifies the
parties' obligations, and for which eligible risks are automatically reinsured, is
Treaty reinsurance
, Which of these statements regarding the principal allocation methods for
reinsurance of surety bonds is accurate?
Both facultative and treaty reinsurance of bonds can be written as pro rata or excess of
loss.
A basic type of bond that involves all situations in which sureties guarantee
performance of obligations that generally do not arise from contracts is
Commercial surety bonds.
Which one of the following developed in the United States to guarantee the large
amounts of money involved in the country's industrial and commercial growth?
Corporate suretyship
The establishment of the formal contract between the surety, principal, and
obligee that is offered to the principal is called
Execution of a bond
While suretyship and banking both use a prequalification process to extend
credit to their customers, suretyship is different from bank credit in that
Suretyship guarantees performance as well as monetary obligations.
Except in the case of a forfeiture bond, if the principal defaults, the surety will pay
Up to the bond penalty, but no more than the obligee's actual loss amount.
In an unlimited cosurety arrangement, the obligee can collect
The full loss from any of the cosureties up to the penal sum of the bond.
The Miller Act was passed to require principals, in addition to furnishing a
performance bond, to furnish a separate payment bond guaranteeing payment of
all bills incurred by the contractor
A. For labor and materials at the project completion for all federal jobs.
A contract bond that guarantees the local governmental authority that a principal
will complete a development in accordance with approved proposals and at the
principal's expense is a
B. Subdivision bond.
Performance bonds guarantee that the obligee will be indemnified for any loss
resulting from the principal's failure to perform the work
A. According to the contract, plans, and specifications; at the agreed price; and within
the time allowed.
In bonds under this classification, the surety pays the entire bond penalty if the
principal fails to complete the obligations.
B. Forfeiture bonds. Under the forfeiture bonds classification, the surety pays the entire
bond penalty if the principal fails to complete the obligations.
This classification of license and permit bonds poses the least risk to the surety
and guarantees that the principal will conform with laws that govern the business
or activity it conducts.
Which bond classification is described?
Compliance only bonds
Which one of these accurately reflects a characteristic of license and permit
bonds?
A license and permit bond frequently must be furnished to the appropriate public entity
by those who need licenses or permits.
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