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abc123
04-29-2005, 10:39 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.

isaac218
04-29-2005, 11:43 PM
Just think:
McClenahan --> multiply
Finger --> divide

The off balance factors according to the two are just reciprocals of each other. If this doesn't answer you question or if I am not even on the right subject I apologize. I had a long day.

abc123
04-30-2005, 01:26 AM
I know two are reciprocals. Which one is the answer if you are asked about the value of OBF ?

Examinator
04-30-2005, 05:06 PM
Don't forget Graves/Castillo's territorial classification group off-balance factor in calculating revised class rates.