Underwriting Assessment Test Quiz

2.

Which of these is not in consumer loan underwriting?

Employment history
Financial statements
Gross margin
Salary

Correct Answer

A. Gross margin

Explanation

In consumer loan underwriting, various factors are considered to determine the borrower's creditworthiness. Employment history is important as it helps assess the stability of the borrower's income source. Financial statements provide insights into the borrower's overall financial health. Salary is a crucial factor in determining the borrower's ability to repay the loan. However, gross margin is not typically considered in consumer loan underwriting as it is more relevant to business loans. It represents the profitability of a company and is not directly related to an individual borrower's ability to repay a consumer loan.

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2

3.

Which of these is irrelevant in underwriting?

Predictive analytics
Underwriting contract
Broker influence
Financial roadshow

Correct Answer

A. Broker influence

Explanation

Broker influence is irrelevant in underwriting because underwriting is the process of evaluating the risk of insuring a person or entity and determining the premium that should be charged. It involves analyzing factors such as predictive analytics and financial information. Broker influence, on the other hand, refers to the potential impact that a broker may have on the underwriting process, which is not considered relevant as it can introduce biases or conflicts of interest. Therefore, broker influence is not a factor that should be considered in underwriting decisions.

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2

4.

Which of these is not in commercial underwriting?

Profitability
Revenue trends
Salary
Gross margin

Correct Answer

A. Salary

Explanation

The question is asking which of the options is not included in commercial underwriting. Commercial underwriting involves assessing the risk and determining the terms and conditions for insuring businesses. The factors considered in commercial underwriting typically include profitability, revenue trends, and gross margin as they help evaluate the financial stability and potential of the business. However, salary is not directly related to the financial stability of the business and therefore is not typically considered in commercial underwriting.

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1

5.

Which of these institutions raise capital through underwriting?

Central banks
Investment banks
Cooperative societies
Insurance institutions

Correct Answer

A. Investment banks

Explanation

Investment banks raise capital through underwriting. Underwriting is the process where an investment bank guarantees the sale of a company's securities and assumes the risk of purchasing them. This allows the company to raise capital by selling its securities to investors. Central banks, cooperative societies, and insurance institutions do not typically raise capital through underwriting.

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6.

Which of these is unrelated to underwriting?

Commercial paper
Corporate bonds
Broker
Government securities

Correct Answer

A. Broker

Explanation

A broker is unrelated to underwriting because underwriting refers to the process of evaluating and assuming the risk of insuring or financing something, such as securities or insurance policies. Commercial paper, corporate bonds, and government securities are all types of financial instruments that can be underwritten, but a broker is not directly involved in this process. A broker acts as an intermediary between buyers and sellers in financial markets, facilitating the buying and selling of securities, but they do not typically assume any risk or guarantee the issuance of securities.

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1

7.

Which of these is most desirable in underwriting?

Reward
Exclusivity
Risk
Interest

Correct Answer

A. Reward

Explanation

In underwriting, the most desirable factor is "Reward." Underwriting involves assessing and evaluating risks associated with insurance policies or investments. The goal of underwriting is to minimize potential losses and maximize profits. By focusing on the potential rewards, underwriters can identify and select the most profitable opportunities. This involves analyzing the potential returns and benefits that can be gained from the underwritten policy or investment. By prioritizing reward, underwriters can make informed decisions that align with the company's financial goals and objectives.

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3

8.

Which of these is not a form of underwriting?

Real estate underwriting
Forensic underwriting
Subjective underwriting
Sponsorship underwriting

Correct Answer

A. Subjective underwriting

Explanation

Subjective underwriting is not a form of underwriting because underwriting typically involves a systematic evaluation of risks and determining the terms and conditions of insurance policies or financial investments. It is based on objective criteria and data analysis. However, subjective underwriting implies a more personal or individualized approach that relies on personal opinions or judgments rather than objective assessments.

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9.

Which of these is not an issue in underwriting?

Reward
Risk
Interest
Exclusivity

Correct Answer

A. Interest

Explanation

Interest is not an issue in underwriting because it refers to the amount of money charged by a lender for borrowing funds. Underwriting, on the other hand, involves assessing and evaluating the risk associated with providing insurance or financial services. While risk, reward, and exclusivity are all factors that underwriters consider, interest is not directly related to the underwriting process.

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0

10.

Which of these may be used to examine the applicant's health status?

Medical underwriting
Insurance underwriting
Risk underwriting
Hazard underwriting

Correct Answer

A. Hazard underwriting

Explanation

Hazard underwriting may be used to examine the applicant's health status. Hazard underwriting involves assessing the potential risks and hazards associated with insuring an individual. In the context of health insurance, this would include evaluating the applicant's health status, medical history, and any pre-existing conditions they may have. By examining these factors, insurance companies can determine the level of risk associated with insuring the applicant and adjust premiums accordingly.

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Underwriting Assessment Test Quiz

What part of underwriting deals with the likelihood of financial loss?

Quiz Preview

Which of these is not in consumer loan underwriting?

Which of these is irrelevant in underwriting?

Which of these is not in commercial underwriting?

Which of these institutions raise capital through underwriting?

Which of these is unrelated to underwriting?

Which of these is most desirable in underwriting?

Which of these is not a form of underwriting?

Which of these is not an issue in underwriting?

Which of these may be used to examine the applicant's health status?