Error in Fall '08 solution?

[Cagu]

I am studying for Exam 6 and I came across what I believe to be an error in one of the solutions for fall ‘08 exam 6. On the Fall Exam 8 posted on the CAS website, URL: http://casualtyactuarialsociety.net/...6/fall08-6.pdf, question #4. PDF page 54 contains the method I used to answer the question. This page agrees that 888.7 (avg. case oustanding) * 43 (open claims at 48 months) = 38,214. However, they seem to think that $38,214 + $138,547 (cum. paid loss at 48 months) = $177,761, when clearly it is $176,761.

Now, for a more general and pressing question. If, on an exam, I made a typo and was off by $1000, or if I was off by a few dollars from inconsistent rounding or something odd that I did, how much will this be penalized by the graders? Do they look to see the exact answer that they have on their grading sheets? Notwithstanding that $1000 difference, I also carried an extra decimal place on one number for no apparent reason, and I was off by a few dollars on my answer to part (b). Would I still get full credit?

I guess what I'm asking for are general guidelines on what are acceptable answers for Exam 5-8 questions, as I've never taken any of these before... Thanks for any help on this!

[.Godspeed.]

I am studying for Exam 6 and I came across what I believe to be an error in one of the solutions for fall ‘08 exam 6. On the Fall Exam 8 posted on the CAS website, URL: http://casualtyactuarialsociety.net/...6/fall08-6.pdf, question #4. PDF page 54 contains the method I used to answer the question. This page agrees that 888.7 (avg. case oustanding) * 43 (open claims at 48 months) = 38,214. However, they seem to think that $38,214 + $138,547 (cum. paid loss at 48 months) = $177,761, when clearly it is $176,761.

You are correct; the solution contains a transcription error.

Now, for a more general and pressing question. If, on an exam, I made a typo and was off by $1000, or if I was off by a few dollars from inconsistent rounding or something odd that I did, how much will this be penalized by the graders? Do they look to see the exact answer that they have on their grading sheets? Notwithstanding that $1000 difference, I also carried an extra decimal place on one number for no apparent reason, and I was off by a few dollars on my answer to part (b). Would I still get full credit?

I guess what I'm asking for are general guidelines on what are acceptable answers for Exam 5-8 questions, as I've never taken any of these before... Thanks for any help on this!

It depends on the work you have shown.

If you write down a final answer that is correct, but you fail to show any corresponding work, you will likely lose significant credit.

If you write down a final answer that is incorrect, but you show the corresponding correct work, you will likely not lose much credit.

Moral of the story: Be clear in your labeling and thought-process involved in the calculations, write out your formulas, and perform example calculations using them. For example, let's say you have to calculate the Bornheutter-Ferguson ultimate loss for a series of accident years. It would probably be most effective for you to:
1) Write out the applicable equation once:

BF Ultimate = Expected Loss Ratio * Ultimate Earned Premium * (1-1/LDF) + Reported Loss;

2) Perform one example calculation for a particular accident year:

AY 2007 BF Ultimate = .65 * 200,000 * (1-1/1.25) + 25,000 = 51,000; and

3) Ensure that you have properly labeled all columns and variables so that you don't have to show the calculation for each accident year.

The graders know that it is impractical to show EVERYTHING; but the more work you show, the better.

Hopefully this helps.

[Cagu]

Yes this helped a lot, thank you!