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Free SOFE AFE Practice Exam with Questions & Answers | Set: 3

Questions 21

Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. In such a case the Accounting Department is responsible for all of the following EXCEPT:

Options:
A.

Supplying the Investment Department with correct data and reports that summarize all loan transactions

B.

Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs

C.

The design, maintenance, and accuracy of accounting records, for periodic management and exception reports, and for statutory statement preparation

D.

Its records may or may not provide the needed data to support this reporting function

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Questions 22

_________________ is a special variation on a second mortgage. In this form, the new lender assumes the original or first mortgage and has the responsibility of collecting all payments and remitting a portion of these payments to the first lender.

Options:
A.

Conventional Residential Loan

B.

FHA loan

C.

Wrap-around loan

D.

VA loan

Questions 23

Internal Control is:

Options:
A.

the process of controlling the impact of risk related events on a company

B.

the process of planning the processes in order to avoid risk related events to a company

C.

the process of designing the models to avoid risk related events on a company

D.

All of the above

Questions 24

Lines of insurance in which claims are settled relatively quickly are called:

Options:
A.

Quick-tail lines

B.

Single-tail lines

C.

Acceptance-tail lines

D.

Short-tail lines

Questions 25

is the price in a hypothetical transaction at the measurement date in the market in which the reporting entity would transact for the asset or liability

Options:
A.

Feasible financial price

B.

Asset/Liability price

C.

Principal price

D.

Exchange price

Questions 26

The auditor should obtain a sufficient understanding by performing risk assessment procedures to:

Options:
A.

evaluate the design of controls not relevant to audit of financial statement

B.

determine whether design of controls have been implemented

C.

Both A & B

D.

Neither A nor B

Questions 27

Home office record-maintenance methods may include:

Options:
A.

duplication of branch records

B.

maintenance of detailed entries for analytical purposes

C.

use of planning procedures from main office for both premiums and cash

D.

All of the above

Questions 28

To avoid double counting or omitting the effects of risks factors what should reflect assumptions that are consistent with those inherent in the cash flows?

Options:
A.

Economic flow

B.

Nominal flows

C.

Discount rates

D.

Inflation effect

Questions 29

Spreading of risks among insurance entities is called:

Options:
A.

Reinsurance

B.

Syndication

C.

Consortium act

D.

Risk Diffusion

Questions 30

Subrogation is:

Options:
A.

legal right of the distributer to recover from vendors who may be wholly responsible for the loss paid under the terms of the agreement.

B.

legal right of the insurer to recover from a third party who may be wholly or partly responsible for the loss paid under the terms of the policy.

C.

legal right of the claimer to recover from the organization that may be wholly or partly responsible for the loss paid under the terms of the company’s policy.

D.

legal right of the business to recover from a third party who may be wholly responsible for the loss paid under the terms of the policy.

Exam Code: AFE
Certification Provider: SOFE
Exam Name: Accredited Financial Examiner
Last Update: Mar 28, 2025
Questions: 286
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