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AFSB 152 EXAM (CHAPTERS 1 - 10) WITH COMPLETE QUESTIONS AND ACCURATE SOLUTIONS
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AFSB 152 EXAM (CHAPTERS 1 - 10) WITH COMPLETE QUESTIONS AND ACCURATE SOLUTIONS
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AFSB 152 EXAM (CHAPTERS 1 - 10) WITHCOMPLETE QUESTIONS AND ACCURATE
SOLUTIONS
An underwriting concern with reverse flow international bonding is
that: Correct Answer The financial strength of many of the
international companies resides outside of the US
A limited liability company is most similar to a: Correct Answer
Subchapter S Corporation
What describes the importance of supplementary data in a
contractor's financial report? Correct Answer Supplementary data
is highly significant in a contractor's financial report
Courts have created the surety's rights of subrogation by ruling on
which one of the following actions by the surety? Correct Answer
A surety that pays under its bond may take over the recovery
rights of those persons to whom or on whose behalf the surety
has made payment
Contractor A bid a job at $8 million. Contractor B, Contractor C,
and Contractor D bid the job at $7.1 million, $7.0 million, and $6.9
million. In this case, most sureties would apply the 10 percent rule
to Contractor A's bid and: Correct Answer An average of all of
the above bids
What performance bond option is particularly effective in the face
of a threat of "blacklisting" by a public, governmental body
obligee? Correct Answer To fund the excess cost of completion
and reserve the surety's rights to sue the obligee for repayment
,Analyst's must inquire about any subsequent changes and
determine whether they have material positive or negative effects
on the analysis.
The analysis should consider events and conditions in these
areas: Correct Answer - Financial performance of contracts: a
variety of factors, such as project management, weather, and
productivity of the labor force can affect financial performance
- Mix of assets and liabilities that may change the financial
structure of the contracting entity
- Changes in ownership or management of the contracting entity
- Litigation involving the contractor
If a contractor fails to sign a contract after being awarded the bid,
and the difference between the principal's bid and the next lowest
bid is more than the bond penalty, then? Correct Answer The
contractor is liable for the excess amount
If there is work on a highway project that requires a deep
excavation and extensive pile driving, the contractor should have
concerns for? Correct Answer Damage to surrounding structures
Which type of guarantees do underwriters typically consider
objectionable? Correct Answer Efficiency guarantees on the
finished project that hold the contractor responsible
What is the reason contractor's are required to provide bid
bonds? Correct Answer This is because obligees do not have
time to review every single bidder's qualifications
Benefit of Surety Bonds to Architects or Engineers: Correct
Answer The bond provides confidence that, in the surety's
,judgement, the contractor can translate project plans into a
finished product.
A contractor's ability to acquire, maintain, and successfully
manage backlogs is reflected in which of these income statement
results over several accounting periods? Correct Answer
Operating Profit
How a typical design process works: Correct Answer 1. The
design professional interviews the client and measures current
and future needs
2. The design professional reviews existing facilities for potential
renovation and for their ability to handle future growth needs
3. Professionals obtain required zoning approvals and ensures
plans comply with government regulations
4. For new construction, the future owner either acquires an
option to acquire the land or building being renovated
5. The owner obtains a building permit
6. The owner arranges financing before construction
What is a surety bond? Correct Answer A written contract that
expresses one partys promise to answer for another partys failure
to do something as promised
What is a surety? Correct Answer The party to a surety bond that
guarantees to the obligee that the principal will fulfill an obligation
or perform as required by the underlying contract, permit, or law.
What is an obligee? Correct Answer The party to a surety bond
that receives the suretys guarantee that the principal will fulfill an
obligation or perform as promised
What is a principal? Correct Answer The party to a surety bond
whose obligation or performance the surety guarantees
, What is suretyship? Correct Answer The obligation of one entity
to answer for the debt, default, or miscarriage of performance of
duties by another entity
What is a contract bond? Correct Answer A surety bond
guaranteeing the fulfillment of obligations under construction
contracts or other types of contracts
How do surety bonds affect lenders confidence in financing a
construction project? Correct Answer Lenders are more confident
in extending project financing in the form of construction loans
when they know that the construction risk has a surety's
guarantee
What are the two bonds typically required under contract bonds?
Correct Answer 1. Performance bond
2. Payment bond
What do performance bonds guarantee? Correct Answer That
the contractor will fulfill all terms, specifications, and conditions of
a construction contract
What do payment bonds guarantee? Correct Answer That the
contractor will pay labor and materials bills associated with the
contract | Executed in favor of the obligee
Are the bond penalties for the performance bond and payment
bond exclusive of each other? Correct Answer Yes; thus the
construction project owner receives significant financial assurance
beyond the contractor's financial resources
What is a bid bond? Correct Answer A contract guaranteeing that
a contractor bidding on a construction or supply contract will enter
into the contract and will provide a performance bond if the bid is
accepted
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