Revision as of 22:49, 17 November 2023 by Admin (Created page with "'''Solution: A''' Cheryl’s force of interest at all times is ln(1.07) = 0.06766. Gomer’s accumulation function is from time 3 is 1 + yt and the force of interest is y/(1 + yt). To be equal at time 2, the equation is 0.06766 = y/(1 + 2y), which implies 0.06766 + 0.13532y = y for y = 0.07825. Gomer’s account value is 1000(1 + 2x0.07825) = 1156.5. {{soacopyright | 2023 }}")
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Exercise

ABy Admin
Nov 17'23

Answer

Solution: A

Cheryl’s force of interest at all times is ln(1.07) = 0.06766. Gomer’s accumulation function is from time 3 is 1 + yt and the force of interest is y/(1 + yt). To be equal at time 2, the equation is 0.06766 = y/(1 + 2y), which implies 0.06766 + 0.13532y = y for y = 0.07825. Gomer’s account value is 1000(1 + 2x0.07825) = 1156.5.

Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

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