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SOFE SOFA-CFE Exam - Topic 5 Question 41 Discussion

A reduction in reserves is referred to as__________________, while an increase in reserves is referred to as________________.
A) favorable development, adverse development
B) unfavorable development, profitable development
C) risky development, beneficiary development
D) loss development, advance development

SOFE SOFA-CFE Exam - Topic 5 Question 41 Discussion

Actual exam question for SOFE's SOFA-CFE exam
Question #: 41
Topic #: 5
[All SOFA-CFE Questions]

A reduction in reserves is referred to as__________________, while an increase in reserves is referred to as________________.

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Suggested Answer: A

by Dean at May 03, 2022, 10:59 AM

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Maile
8 months ago
I thought it was called loss development?
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Ashanti
8 months ago
Increase in reserves is definitely a favorable development.
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Ellsworth
9 months ago
Wait, are we sure about that? Sounds off to me.
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Tashia
9 months ago
Totally agree, it's all about the terminology!
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Lisbeth
9 months ago
It's called unfavorable development for a reduction in reserves.
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Stephaine
9 months ago
I feel like "loss development" might be the right term for a reduction, but I can't remember what the increase is called.
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India
9 months ago
I’m a bit confused; I thought both terms were related to profit and loss, but I can't recall the exact phrases.
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Edison
9 months ago
I think a reduction in reserves is called unfavorable development, but I'm not sure about the second part.
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Noemi
9 months ago
I remember practicing a question like this, and I think the terms are favorable for an increase in reserves.
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Juan
9 months ago
Hmm, this is a tough one. I'm not sure if I should go for the lowest cost options (C) or the ones that are easiest to achieve (B). I'll have to think this through carefully.
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Stephania
9 months ago
This seems like a straightforward question. I think the answer is to share the app so my coworkers can access and run it.
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Glendora
10 months ago
Okay, let's think this through. The question is asking about the default recognition methods available when creating a new revenue recognition rule, and we need to choose two. I'm leaning towards A and D, but I'll double-check the options to be sure.
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