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Accredited Financial Examiner (AFE) Questions 121–125 (page: 26)

Updated On: 10-Feb-2026

Which of the following is NOT the primary consideration for defining the capital of a company for purposes of measuring capital adequacy?

  1. Permanence
  2. Freedom from mandatory fixed charges
  3. Debtors of the business
  4. Creditors of the business

Answer(s): C



The process of analyzing and projecting the trends of a company's capital position given its current circumstances, its recent past, and its intended business plan under a variety of future scenarios is called:

  1. Permanence and Reliability Testing
  2. Dynamic Capital Adequacy Testing
  3. Capital Market Testing
  4. None of the above

Answer(s): B



Internal Control is:

  1. the process of controlling the impact of risk related events on a company
  2. the process of planning the processes in order to avoid risk related events to a company
  3. the process of designing the models to avoid risk related events on a company
  4. All of the above

Answer(s): A



Identification and documentation of the controls and policies which address the risk management issues for each of the Standards is the necessary step for:

  1. Operational procedure
  2. Guideline procedure
  3. Organizational policy
  4. Self-assessment process

Answer(s): D



Which investments held by life insurance enterprises should be carried in the balance sheet at amortized cost?

  1. Appraisal-term acts
  2. Variable-term portfolio
  3. Fixed-term portfolio
  4. Revenue-earned portfolio

Answer(s): C



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