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Free SOFE AFE Practice Exam with Questions & Answers | Set: 2

Questions 11

Scope of Examination and Report of Independent Certified Public Accountant states that:

Options:
A.

the insurer shall also require that the independent certified public accountant subject the data used by the appointed actuary to testing procedure.

B.

the insurer shall also require that the group of certified public accountant subject the data used by the appointed actuary to planning procedure.

C.

the investor shall also require that the independent certified private accountant subject the data used by the appointed actuary to developing procedure.

D.

the investor shall also require that the independent certified public accountant subject the data used by the appointed actuary to maintaining procedure.

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Questions 12

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

Options:
A.

Feasible investment strategy

B.

Design strategy

C.

Risk strategy

D.

Product risk strategy

Questions 13

Which of the following is the objective to the evaluation and risk-accepting function?

Options:
A.

Evaluating and acceptability of risk

B.

Determining the premium

C.

Evaluation of entity’s capacity to retain risk

D.

All of the above

Questions 14

Many companies have developed an asset/liability management approach that is founded on understanding product liabilities. Mortgages meet the primary objective of maintaining:

Options:
A.

A tight asset/liability match

B.

A well-diversified core of investments

C.

A tight asset/liability match with a well-diversified core of investments.

D.

Real estate lending by insurance companies

Questions 15

Put Option is:

Options:
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.

Questions 16

The sum of values assigned by claims adjusters to specific known claims that were recorded by the insurance entity but not yet paid at the financial statement date is called:

Options:
A.

case-basis reserves

B.

computing reserves

C.

aggregate reserves

D.

None of the above

Questions 17

Schedule rating:

Options:
A.

starts with a real standard, frequently the judgmental rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

B.

starts with an assumed standard, frequently the manual rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

C.

starts with an assumed standard, frequently the class rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

D.

starts with a real standard, frequently the individual rate, and adjusts such standard rates according to an evaluation of greater or lesser exposure to risk.

Questions 18

Which risk assessment procedures are used to obtain an understanding of the entity and its environment, including its internal control?

Options:
A.

Inquiries of management

B.

Analytical procedures

C.

Observation

D.

All of the above

Questions 19

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

Options:
A.

Regulation of Insurer Financial Disclosure

B.

Regulation of Insurer Investment Activity

C.

Regulation of Insurer Reserve Adequacy

D.

Regulation of Insurer Asset Adequacy

Questions 20

Financial Statements provide additional valuable information on the loans. Some of the more significant information provided includes EXCEPT:

Options:
A.

The valuation of the mortgage loan portfolio, including a description of the valuation basis for mortgage loans and income recognition

B.

The recorded investment and interest past due on mortgages with interest more than 90 days past due

C.

The recorded investment and number of mortgages on which interest has been reduced, and the percent the interest was reduced

D.

Disclosures of impaired loans: The total recorded investment in impaired loans at the end of each period

Exam Code: AFE
Certification Provider: SOFE
Exam Name: Accredited Financial Examiner
Last Update: Nov 29, 2025
Questions: 286
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