SOFE Exam AFE Topic 2 Question 46 Discussion

Actual exam question for SOFE's AFE exam

Question #: 46
Topic #: 2

[All AFE Questions]

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

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Kathrine

1 months ago

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

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James

1 months 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.

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Kenny

1 months 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?

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Cheryll

6 days ago

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

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2 months ago

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

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