Revision as of 21:44, 19 January 2024 by Admin (Created page with "'''Answer: D''' The policy is fully discrete, so all cash flows occur at the start or end of a year. Die Year <math>1==>L_{0}=1000 v-315.80=625.96</math> Die Year <math>2==>L_{0}=1000 v^{2}-315.80(1+v)=273.71</math> Survive Year <math>2==L_{0}=1000 v^{3}-315.80\left(1+v+v^{2}\right)=-58.03</math> There is a loss if death occurs in year 1 or year 2, otherwise the policy was profitable. <math>\operatorname{Pr}(</math> death in year 1 or 2<math>)=1-e^{-2 \mu}=0.113</m...")
Exercise
ABy Admin
Jan 19'24
Answer
Answer: D
The policy is fully discrete, so all cash flows occur at the start or end of a year.
Die Year [math]1==\gtL_{0}=1000 v-315.80=625.96[/math]
Die Year [math]2==\gtL_{0}=1000 v^{2}-315.80(1+v)=273.71[/math]
Survive Year [math]2==L_{0}=1000 v^{3}-315.80\left(1+v+v^{2}\right)=-58.03[/math]
There is a loss if death occurs in year 1 or year 2, otherwise the policy was profitable.
[math]\operatorname{Pr}([/math] death in year 1 or 2[math])=1-e^{-2 \mu}=0.113[/math]
Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.