CPCU 540 Practice Exam

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1. Which of the following represents the use of technological devices in vehicles with wireless communication and GPS tracking that transmit data to business or government agencies?

2. Which one of the following statements is correct regarding the capital needs relating to an insurance company?

3. The National Association of Insurance Commissioners (NAIC) has developed a system to determine the minimum capital required for an insurer to continue its existing operations based on its level of risk. The system developed by the NAIC is the:

4. What is the main reason liability insurers generally have a greater rate of return on their investments than the return received by property insurers?

5. A company’s dividend policy decision considers several factors. Which one of the following factors would most likely cause a company to retain earnings as opposed to paying a dividend?

6. Which one of the following ratios measures the extent to which an insurer can meet its obligations as they come due?

7. The profitability of a company is calculated on which one of the following financial statements?

8. Which one of the following represents the rate of return earned by a bond, adjusted for inflation?

9. In which of the following situations would a company be required to file Form 8-K with the SEC?

10. Which one of the following investments would be best to match an insurer’s investment portfolio maturity to the insurance company’s expected loss payments?