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AU 60 Final Exam Test Questions with correct answers
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AU 60 Final Exam Test Questions with correct answers
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AU 60 Final Exam Test Questions withcorrect answers
Samuel is a commercial accounts underwriter working on a new application with five buildings located
within the same territory. Samuel would like a photo of each building, and some nontechnical
information about the condition of the parking lots and the neighboring buildings. Which one of the
following would be the most reliable and cost effective source of this information? - correct answer -
Marketing representative
The principal purpose of underwriting is to - correct answer -Develop and maintain a profitable book of
business for the insurer.
The goal of actuaries and underwriters in designing a rating system is to make each class - correct
answer -As homogeneous as possible without sacrificing the predictive accuracy that large numbers
create.
ABC Insurance Company's actuary has calculated the pure premium for the company's homeowner's
insurance line as $40. Fixed expenses for the line are $2.50 per exposure unit and variable expenses are
12 percent. The company's loading for profits and contingencies is 5 percent. Using the pure premium
ratemaking method and rounding to the nearest whole dollar, which one of the following is the rate per
exposure unit that ABC needs to charge? - correct answer -$51
All of the following are advantages of the sole proprietorship type of business ownership, EXCEPT: -
correct answer -Limited liability
Home builder Jerry Barton engaged an electrician to install overhead ceiling fans in many new homes.
Jerry paid the electrician by the hour, supervised his work, and had the right to discharge him. Which
one of the following terms best describes the employment status of the electrician? - correct answer -
Employee
The "bottom line" of an income statement shows the organization's - correct answer -Net income.
An underwriter uses a firm's current assets when calculating the current ratio. Current assets are -
correct answer -Cash and easily-liquidated assets.
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