AFSB 151 Final Exam Questions With Complete Solutions.
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AFSB 151
AFSB 151 Final Exam Questions With Complete Solutions.
A surety bond is a written document in which one party guarantees a second party's
Performance to a third party for the second party's failure to fulfill an obligation.
Which one of the these groups, for the most part, serves the market fo...
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AFSB 151 Final Exam Questions With
Complete Solutions.
A surety bond is a written document in which one party guarantees a second
party's
Performance to a third party for the second party's failure to fulfill an obligation.
Which one of the these groups, for the most part, serves the market for fidelity
and surety bonds in the United States?
Multiline property-casualty insurers
Sureties use what written document to authorize a producer to act as the surety's
agent in bond production?
A power of attorney
While suretyship and banking both use a prequalification process to extend
credit to their customers, suretyship is different from bank credit in that
Suretyship guarantees performance as well as monetary obligations.
Because most bonds are "joint and several liability" documents, the obligee can
recover losses from
The principal or the surety, or from both.
A financial guarantee differs from performance and fidelity guarantees because it
requires honesty, the ability to perform the contract, and
The ability to pay money to meet the contractual obligation.
A legal remedy that a surety can use against a defaulting bond principal, in which
the surety exercises its right to force the principal to perform by exhausting the
principal's resources instead of its own, is
Exoneration
In an unlimited cosurety arrangement, the obligee can collect
The full loss from any of the cosureties up to the penal sum of the bond.
A bond that guarantees that faulty work will be corrected and defective materials
will be replaced for a period of one year or less and that is usually provided with a
performance bond at no additional cost is a
Maintenance bond
A contract bond that guarantees the local governmental authority that a principal
will complete a development in accordance with approved proposals and at the
principal's expense is a
Subdivision bond
This classification of license and permit bonds poses the least risk to the surety
and guarantees that the principal will conform with laws that govern the business
or activity it conducts.
Which bond classification is described?
Compliance-only bonds
Under a public official bond guaranteeing the honesty of a treasurer,
He or she must account for the cash that he or she holds while in office.
, Bond losses occur when a fiduciary and its surety are held accountable because
the fiduciary did not exercise reasonable care in notifying all heirs of an
impending probate proceeding. This fiduciary is called
An administrator
A person who commences an action against another to obtain an equitable
remedy may be required to post a bond before the court will proceed with the
action. This bond is called
A plaintiff bond
The legally mandated hazardous waste facilities performance bond
Can be posted only for hazardous waste facilities with permits, and it requires an
underwriting review of the closure plan.
The principal on a hazardous waste bond
Is an owner or operator of a hazardous waste facility and is responsible for closure and
postclosure care of the facility.
In the next step of the bond prequalification process, once the producer has
compiled the contractor's financial documents showing significant liquidity,
The producer may facilitate underwriter interviews to help determine the contractor's
experience in meeting past contractual obligations.
A contractor's percentage-of-completion estimates
Are based on the contractor's ability to estimate the cost to complete the project and
recognize income and profit as they accrue during the project.
A $5 million/$20 million contract surety credit line means that the surety is willing
to
Bond single jobs up to a contract price of $5 million when the aggregate contract
backlog does not exceed $20 million.
Which one of the following statements is true regarding surety producers'
promotion?
Participating in professional seminars and construction industry associations is an
excellent way to communicate to a target audience.
When developing one aspect of the business plan, the planning group should
consider their agency's philosophy and culture, management quality and
commitment, team motivation and dedication, resources, and the continuity of
ownership and management. Which one of the following describes this aspect of
the planning process?
Identify the agency's strengths and weaknesses
Which one of these categories of court bonds is written primarily on the basis of
an attorney's character and reputation for trustworthiness?
Fiduciary bonds
Producers of public official bonds serve themselves and their prospective
principals by
Offering their services in September after primary elections are over and the candidates
are known.
Staff underwriting activities generally include which one of the following?
Formulating underwriting policy
In the protective phase of the bond underwriting decision, indemnity is waived
only for what type of bonds?
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