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AFSB 153 - Practice Exam questions with verified solutions 2024/2025
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AFSB 153 - Practice Exam questions with verified solutions 2024/2025
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AFSB 153 - Practice ExamUnder a surety bond, the penal sum is the same as
The amount for which the bond is written.
3 multiple choice options
Which one of the following is true regarding characteristics of commercial surety bonds?
Nonstatutory bond obligations are determined by bond language and written contracts.
3 multiple choice options
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All of the following illustrate commonalities among all commercial surety bonds, EXCEPT:
Coverage of additional parties is eliminated.
3 multiple choice options
If a principal fails to perform its obligation to the obligee, which one of the following parties must
respond?
The surety
3 multiple choice options
Which one of the following sections of a commercial surety underwriting application details the
principal's obligations that protect the surety?
The indemnity wording
3 multiple choice options
,A surety underwriter might require which one of the following, in addition to the personal liability
of the corporate owners or third parties, when underwriting a hazardous bond?
Collateral
3 multiple choice options
A surety will not provide a bond unless the underwriter is convinced that
The principal can perform the obligation the bond guarantees.
3 multiple choice options
Which one of the following surety types is likely to have studied the needs of small market
segments and adapted products to meet those needs?
Niche sureties
3 multiple choice options
If a bond applicant requires more than one surety bond, which one of the following steps must
the producer take to help the applicant secure the required bonds?
Assist the applicant in completing separate applications for each bond required
3 multiple choice options
Which one of the following is one of the two marketing roles that surety bond producers serve?
Locating sureties for clients
3 multiple choice options
Which one of the following are advisory rates based solely on loss experience?
Loss costs
3 multiple choice options
Sureties prefer to write
Continuous bonds with cancellation clauses.
3 multiple choice options
Which one of the following is a method surety claims representatives can use to address
multiple claimants?
Interpleader action
,Which one of the following is correct regarding compliance-only license and permit bonds?
Compliance-only license and permit bonds are the least hazardous for the surety, and bond
penalties are generally small.
3 multiple choice options
Which one of the following is correct regarding forfeiture bonds?
In forfeiture, the surety pays the entire bond penalty.
3 multiple choice options
Which one of the following is the obligee on state livestock dealers bonds?
The state
1 multiple choice option
Which one of the following is correct regarding underwriting state agricultural bonds?
Underwriters prefer that bond principals on state agricultural bonds be audited annually by
regulators.
3 multiple choice options
Which one of the following is correct regarding the risk associated with milk dealer bonds?
Milk dealer bonds are potentially hazardous as bond penalties can exceed $1 million
3 multiple choice options
The obligee on a Packers and Stockyards Act bond is
The federal government.
3 multiple choice options
Which one of the following correctly describes action an underwriter should take regarding
compliance-only contractors bonds?
Confirm that the contractor has property and liability insurance
3 multiple choice options
Ralph is a producer who has been given a power of attorney by Grant Surety Partners to write
contractors license bonds. Which one of Ralph's actions would likely be the most valuable to
Grant's underwriters?
His prior knowledge of customers' character.
3 multiple choice options
, The construction tradesperson who is required by a state, county, or municipality to have a
contractors license bond is the
Principal.
3 multiple choice options
Which one of the following is correct regarding a customs bond?
The surety on a customs bond must be licensed by the Treasury Department.
3 multiple choice options
Which one of the following is correct regarding sureties' period of liability on customs bonds?
Sureties' liability may extend for years after cancellation of a continuous customs bond.
3 multiple choice options
Randolph Importers has posted a continuous bond with the CBP for merchandise it is receiving
from Europe. The bonds provide coverage for any potential duties, taxes, and penalties that
may be assessed, but not collected, at the time of entry of the merchandise. The duties, taxes,
and fees for a 12-month period total $480,000. Given this information, what is the bond's penal
sum?
$50,000
3 multiple choice options
Which one of the following insurance company employees is often required to post a bond?
Adjuster
3 multiple choice options
Which one of the following is a factor that lessens the underwriting risk for an applicant for a
collection agency bond?
A firm that deposits funds in Federal Deposit Insurance Corporation insured institutions
3 multiple choice options
The obligee on a mortgage broker, banker, and lender bond is
The state, to hold it harmless for misconduct.
3 multiple choice options
Which one of the following is correct regarding producers for franchise and ordinance bonds?
Sureties often advertise to producers that they provide franchise and ordinance bonds.
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