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Actex-Exam M-Problems & Solutions-Fall 2005

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  • Actex-Exam M-Problems & Solutions-Fall 2005

    The following sample problems and solutions were provided to Actuary.com by Actex from their ACTEX Study Manual for SOA Exam M -- Fall 2005 Edition.

    Problems:
    www.actuary.com/actuarial-exam-problems/exam-M/actuarial-exam-M-problems-Actex-2005-fall.pdf
    Solutions:
    www.actuary.com/actuarial-exam-problems/exam-M/actuarial-exam-M-solutions-Actex-2005-fall.pdf

    The authors are: Matthew J. Hassett, ASA, Ph.D., Donald G. Stewart, Ph.D., and Amy Steeby
    Last edited by admin; July 11 2005, 02:44 PM.
    Actuary.com - www.actuary.com
    Email - [email protected]

  • #2
    Error in question 8?

    Has anyone else noticed that the benefit premium in question 8 is wrong? You'll find out if you try to work the question using the usual reserve formulas instead of using recursion, as they solved it.

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    • #3
      Originally posted by shimma
      Has anyone else noticed that the benefit premium in question 8 is wrong? You'll find out if you try to work the question using the usual reserve formulas instead of using recursion, as they solved it.
      You're assuming that Initial Reserve = 0, or more specifically, present value of benefits at time 0 = present value of premiums at time 0. For this question, this is not the case. The initial reserve is non-zero, and you use the formula accordingly. If you try and set PVFB = PVFP, then you'll have a mismatch of about 270.

      When it comes exam time, take the information you're given and answer the question accordingly.

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      • #4
        It's my understanding that the notation they use for the premium (Px:3) specifies a benefit premium and the notation Vx:3 specifies benefit reserves. Generally, a non-benefit premium is just called P or pi and the reserve called V. I could be wrong about this, but I hope not because I'm going into the exam assuming it's true.

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        • #5
          In looking again at their solution to the problem, they assume that the initial reserve is zero. Then they use the recursion formula to calculate 1V and 2V. You're saying that the intial reserve is non-zero. So what is 0V? How do you calculate it?

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          • #6
            Yeaa.. #8 does seem wrong to me. If you use tVx:3 = 1 - [(a x+t:3-t)/(a x:3)] you don't get the same answer. i got 1Vx:3=.3 and 2Vx:3= .632 anyone get the same as me???

            Comment


            • #7
              Originally posted by shimma View Post
              Has anyone else noticed that the benefit premium in question 8 is wrong? You'll find out if you try to work the question using the usual reserve formulas instead of using recursion, as they solved it.
              (by monkey2003) Yeaa.. #8 does seem wrong to me. If you use tVx:3 = 1 - [(a x+t:3-t)/(a x:3)] you don't get the same answer. i got 1Vx:3=.3 and 2Vx:3= .632 anyone get the same as me???
              The benefit premium should be changed to 1000P_{x;3} = 319.574957. Then you can apply both methods (the one given in the solution and the one by reserve formula) to get the same result. And the answer to the question #8 is now 332.223147.

              ctperng

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