abc123

04-29-2005, 09:39 PM

In ratemaking

OBF is calculated as = On-Level EP / Adjusted On-Level EP

if the on-level EP = 31180 and the Adjust On-level EP is 30250, OBF = 1.0516 (page 8 of All 10 ), so to adjust others, you just multiply the OBF

However, in 2002 Exam Question 19 (also on P78, P88 on All 10),

The OBF was calcuated as Adjusted On-Level EP/On-Level EP instead, and when calculating the overall rate level change, it divides the OBF.

I know the overall rate level change calculation is fine, but since the question asks specifically about OBF, which one should be the right answer ?

Thanks.

OBF is calculated as = On-Level EP / Adjusted On-Level EP

if the on-level EP = 31180 and the Adjust On-level EP is 30250, OBF = 1.0516 (page 8 of All 10 ), so to adjust others, you just multiply the OBF

However, in 2002 Exam Question 19 (also on P78, P88 on All 10),

The OBF was calcuated as Adjusted On-Level EP/On-Level EP instead, and when calculating the overall rate level change, it divides the OBF.

I know the overall rate level change calculation is fine, but since the question asks specifically about OBF, which one should be the right answer ?

Thanks.