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The balloon payment technique uses level payments of principal and interest but for a shorter period than is required to retire the loan fully during its term. For example, a loan with a 8.5 percent interest rate utilizing a 25-year amortization schedule with a 7-year maturity results in only $111 of each $l,000 principal being repaid. Thus, $889 of each $l,000 originally borrowed constitutes the balloon amount due at maturity.
A company that has its loans serviced, for whatever reason, is usually charged a servicer’s fee. This fee is usually expressed:
Quantifies the sensitivity of the option price to changes in interest rates is known as:
During the underwriting process, information related to a mortgage loan is collected, and this information is the basis for a final decision as to whether or not the loan should be made. The documents generated during this underwriting process are all of the following EXCEPT:
Sales of securities are recorded as of the trade date. A receivable due from the broker is established in instances when a security has been sold, but the proceeds from the sale have not been received. Receivable for securities not received within settlement date are non-admitted, and are classified as other than invested assets.
The adjustments of the premium during the period of coverage based on actual experience during that same period are called:
What is largely systematic that is; all insured risks are strongly affected by certain common influences, like developments in the capital markets?
A premium deficiency relating to which insurance contracts indicate a probable loss on premiums yet to be earned.
Interest rates are a key element of any option pricing exercise because cash flows are discounted at interest.
It usually is acceptable to use the subsidiary’s statements if the difference in fiscal periods is:
The potential for loss resulting from changes in market interest rates are known as:
The difference between the purchase price and the repurchase price, or sale price, plus accrued interest on the security represents:
Generally, residential loans are open to prepayment at any time without penalty. To protect against a deficiency, mortgage loans should not exceed the market value of the mortgaged property and in fact are usually made for:
Procedures for ensuring that the data used by the loss reserve specialist is completed and accurate due to:
The name of each Subsidiary, Controlled and Affiliated (SCA) entity and percentage of ownership of common stock must be put to disclosure when:
Extrapolation of historical dollars, projection of separate frequency data, use of expected loss ratios are all projection methods for:
________ are contracts with the insurer which provide for periodic payments over a specified period or in specified amounts. In most respects they are administered and accounted for much like supplementary contracts without life contingencies since there are no mortality or morbidity considerations that affect the amount to be paid.
The value of the capital stock shown in the stock life insurance company’s statutory basis balance sheet equals the par value per share multiplied by the number of issued shares. In the case of no-par stock:
In which of the following, Internal entity experience or information from published sources concerning recent trends in socioeconomic factors affecting claim payments:
Short-duration contracts provide insurance protection for fixed period and can cancel the contract at the end of any contract period.
A substantial investment is defined as any investment comprising more than 15 percent of an enterprise’s voting shares or greater than 35 percent of its equity.
Which counterparts of duration and convexity are the first- and second order sensitivities of an equity market instrument to changes in the price of the underlying?
The difference between the carrying value of the parent’s investment in subsidiary and the amount received is treated as a gain or loss in the:
A holistic analysis in a multi-scenario framework of all significant factors that can affect an insurer’s future financial condition is called:
Generally, Participation income is an income stream due the company and is based upon the financial results of the borrower and/or borrowing business entity. Although it can take several forms, the more prominent ones are:
What is the act in which the main sections are for Canadian companies and for foreign companies?
What is characterized by liabilities “shorter” than assets, which can lead to the liquidation of assets at depressed values in times of higher than expected interest rates?
An instrument that grants the holder the right but not the obligation to buy the underlying asset at a specified strike price is known as:
What funnels premium dollars into separate accounts which means segregated pools of bonds or stocks?
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?
Insurance entities usually write covered-call options because they consider the premium received for writing the options to be either:
A mortgage servicer performs all of the servicing functions. The servicer remits all funds received on the serviced loans to the company on a monthly or other periodic basis and usually reports all transactions, including foreclosures and transactions related to foreclosed property. The contract between the company and servicer should provide that the:
The nature and extent of interest rate risk, credit risk, reinsurance risk and other significant risks should be disclosed is required for:
On both old and new business, companies can also avoid premium notes by entering into agreements involving deposits of a portion of the premium with an extension on the balance. These deposits are treated as:
The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as:
Schedule H retains the identity of the Group Accident and Health and the Credit Accident and Health lines of business. However, in Schedule H the line of business designated as Other Accident and Health is subdivided to identify individual policies or elective options. Which of the following is/are out of those classifications?
Investments in equities by a life insurance company may not exceed the total of
The options for securities that insurance entities own and can deliver if the options are exercised by the option buyers are called:
The risk that the obligation will not be fulfilled and affects the value at which the liability is transferred is known as:
Who is responsible for accounting for customer remittance advices and the agent’s current account?
Valuation technique should be used to measure fair value and is consistent with:
For immediate annuities, this is the ______________, defined by the sequence of periodic annuity benefit payments the policyholder is promised.
When a retained asset account is established in the place of a cash settlement, an interest bearing account is created by the insurer for the beneficiary. The beneficiary receives a checkbook with which to draw upon funds in the new account. The account holder can make:
The evaluation and subsequent purchase or sale of investments is based on the judgment of the entity’s investment and finance committees.
Insurers issuing participating policies sometimes incur dividends which have been earned but which have not been disbursed or otherwise credited as of the financial statement date. Such dividends represent a due and unpaid liability amount. Reasons why dividends may be due and unpaid include all of the following EXCEPT:
________ allow investments to be made, up to a certain percent of invested or total admitted assets, in assets that do not otherwise meet regulatory requirements. If their domiciliary jurisdiction regulations have a this, a life insurer with a business purpose for doing so can make a limited amount of mortgage loans that do not meet regulatory requirements without a reduction in surplus. However, some jurisdictions do exercise some extraterritorial jurisdiction related to it.
What is applied to the sale of all or a block of an entity’s insurance in force of another entity?
A change in _______ or its application is appropriate if the change results in a measurement that is equally or more representative of fair value in the circumstances.
The securities repurchased have the same stated interest rate as, and maturities similar to, the securities sold and are generally priced to result in substantially the same yield is known as:
Permanent stockholders’ equity represents an outside claim (from the permanent stockholders’ perspective) on the net assets of a subsidiary.
Cash does include funds in transit, unless the deposit was prepared and sent to the bank. If the deposit was sent to the bank, it is considered cash and entered into the company’s books and is no longer in transit. Funds in transit not yet sent to the bank are entered:
Which of the following is NOT the primary consideration for defining the capital of a company for purposes of measuring capital adequacy?
What is based on statistical data and are large groups of similar risks can be classified by a few and easily identifiable characteristics and result in standard rates?
An estimate due to time lags in the receipt of reports from cendants is called reinsurance.
The ten largest companies account for what percent of life insurance sales in Canada?
Selling a stream of contingent revenues to another party, at a discount to the expected value is called:
A private agreement to buy or sell a given quantity of an asset such as a currency, interest rate or commodity at a specified future date at a specified price is called:
What usually features a fixed premium that acts to levelize the policyholder’s outlay over the lifetime of the policy?
A package of coverage including most property and liability coverage except workers’ compensation, automobile insurance and surely bonds is called:
For Generally Accepted Accounting Principles (GAAP), the four methods for reporting the results of operations and financial position of a subsidiary (investee) by a parent (investor) are:
In which policies the contract provides for insurance coverage for a fixed period of duration and enables the insurer to not renew the contract or adjust the provisions of the contract at the end of the contract period?
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. The Investment Department is responsible for promptly supplying the Accounting Department with:
Special surplus funds are portions of surplus allocated or appropriated for a specific purpose. Special surplus funds usually are allocated voluntarily but also may be required by an insurance regulator. Which one the following is NOT an example of special funds:
TESTED 02 May 2026