SOFE AFE Exam - Topic 2 Question 46 Discussion

Actual exam question for SOFE's AFE exam

Question #: 46
Topic #: 2

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:

AThe stated value per share is used (or liquidation value, for no-par preferred capital stock)

BThe Total value of shares is used (or liquidation value, for par preferred capital stock)

CThe market value per share is used (or liquidation value, for no-par preferred capital stock)

DCapital stock may be sold to the public for an amount greater than par or stated value

Show Suggested Answer

Suggested Answer: B

by Celeste at Sep 22, 2022, 02:32 PM

Limited Time Offer

25%

Off

Get Premium AFE Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Lindsey

7 months ago

Just to clarify, par value is different from market value.

upvoted 0 times

...

Wava

7 months ago

D is interesting, but isn't that just for public offerings?

upvoted 0 times

...

Rima

7 months ago

Wait, isn't it more complicated than that?

upvoted 0 times

...

Ashleigh

7 months ago

Totally agree, that's how it works!

upvoted 0 times

...

Magdalene

7 months ago

A is correct, stated value is key for no-par stock.

upvoted 0 times

...

Wenona

8 months ago

I recall that capital stock can be sold above par value, so D could be relevant, but I think the focus is more on how we value no-par stock.

upvoted 0 times

...

Melvin

8 months ago

I'm a bit confused about the terms used in the options. I feel like I need to review what liquidation value means in this context.

upvoted 0 times

...

Tandra

8 months ago

I remember practicing a similar question where we discussed how no-par stock is valued. I think A makes the most sense here.

upvoted 0 times

...

Sherell

8 months ago

I think the answer might be A, but I'm not entirely sure about the distinction between stated value and liquidation value.

upvoted 0 times

...

Demetra

8 months ago

Okay, let's see here. I'm pretty confident that cross-site scripting and log poisoning would be the best options to try next. The question is specifically asking about the "most likely" next steps, so those seem like the safest bet.

upvoted 0 times

...

Bernardine

8 months ago

I think SMED is related to reducing setup time, but I'm not 100% sure. It might be option D?

upvoted 0 times

...

Bettye

8 months ago

No problem, I've done plenty of these types of capital budgeting problems before. I'll just plug all the numbers into the right formulas and I should be able to get the right answer quickly.

upvoted 0 times

...

Billye

8 months ago

Hmm, I'm a bit confused. The question says there might be more than one correct solution, so I'm not sure if changing the pricing tier is the only way to solve this. I'll need to review the different App Service options and see if there are any other potential solutions.

upvoted 0 times

...

Allene

8 months ago

The ORIGINATION-PE and LOCAL-CITY communities are definitely crucial, I've seen questions about that before, but I can't remember the exact syntax we practiced.

upvoted 0 times

...

Kathrine

1 year ago

This question is making my head spin. I need to find the answer key and a strong cup of coffee!

upvoted 0 times

...

James

1 year ago

Hold on, I think the answer is B. We use the total value of shares for par preferred capital stock, not the liquidation value.

upvoted 0 times

...

Kenny

1 year ago

Hmm, I'm leaning towards option D. Doesn't the capital stock get sold to the public for more than par or stated value?

upvoted 0 times

Ryan

11 months ago

In that case, option D seems to be the most accurate choice for the value of capital stock in the case of no-par stock.

upvoted 0 times

...

Earleen

11 months ago

Yes, that's correct. Capital stock can indeed be sold to the public for an amount greater than par or stated value.

upvoted 0 times

...

Cheryll

11 months ago

I think you're right, option D makes sense because capital stock can be sold for more than par value.

upvoted 0 times

...

Emerson

1 year ago

Wait, isn't it option C? I thought we use the market value per share for no-par stock.

upvoted 0 times

Remedios

1 year ago

C) The market value per share is used (or liquidation value, for no-par preferred capital stock)

upvoted 0 times

...

Rolland

1 year ago

B) The Total value of shares is used (or liquidation value, for par preferred capital stock)

upvoted 0 times

...

Dawne

1 year ago

A) The stated value per share is used (or liquidation value, for no-par preferred capital stock)

upvoted 0 times

...

Leana

1 year ago

I'm pretty sure it's option A. The stated value or liquidation value is used for no-par stock, right?

upvoted 0 times

Berry

1 year ago

That's right. The stated value or liquidation value is used for no-par stock.

upvoted 0 times

...

Arlene

1 year ago

Yes, you are correct. The stated value per share is used for no-par stock.

upvoted 0 times

...

Shantell

1 year ago

I believe the answer is D) Capital stock may be sold to the public for an amount greater than par or stated value, as it allows for flexibility in pricing

upvoted 0 times

...

Ezekiel

1 year ago

I agree with Cecilia, because for no-par stock, there is no par value to use

upvoted 0 times

...

Cecilia

1 year ago

I think the answer is A) The stated value per share is used

upvoted 0 times

...