AIC Certified Associate Constructor (CAC) Practice Exam

In a bond premium schedule, each bond size tier has a fixed base amount that starts the premium calculation for any bond falling in that range. For the tier that covers the next 2.5 million in bond value (the range from 2.5M up to 5M), the fixed base amount is $20,500. This base amount accounts for the fixed underwriting and administrative costs of issuing a bond within that size, and it serves as the minimum premium you’d pay for bonds in this tier. Any amount above the lower bound (2.5M) would then be charged at the tier rate on the excess portion. The other numbers are simply too small to represent the base cost associated with a bond in this larger tier.