View Full Version : Question from 8I Nov 2001 exam

09-30-2002, 04:19 PM
Can someone please explain the SN results for Question #2a
(seriatim stochastic simulation).

I understand policy numbers 1,2 and 5 but not 3 and 4 UNLESS they mixed up the Qd rates for these two policies.

Thanks in advance.

10-02-2002, 12:13 PM
#1 rule when looking at these sample exam answers is that the answers aren't necessarily right. It is a sample answer that got full credit - not a sample answer that was 100% right.

Point to take away from the question you are asking about - obviously, you can make some stupid errors and still get full credit for the question.

Note also that on part b, the question was not answered using pricing assumptions. It was answered using information about actual experience.

I think that the SOA approach to using imperfect answers is useful on some questions, but it is not useful when there are calculations involved.

10-02-2002, 12:20 PM
Speaking of, someone correct me if I am wrong on this, but...

On the last question of the morning session, where they ask you to calc ROE with the reinsurance and with the bond issue - the model answer calculates the -reinsurer's- ROE?!

That is totally not what the question asked for or did I misread something?

10-02-2002, 04:35 PM
The model answer calculates both the new ROE and the reinsurer's ROE. --- but the reinsurer's ROE isn't asked for.

The really confusing thing about this problem to me is all the typos --- an investment of 385 million with ROI of 13% produces earnings of $50 million. (model answer says 59)

The reinsurer requires 26% of earnings - not 46%.

10-02-2002, 04:36 PM
I completely fudged my way through it and got a breakdown score of 4. That coupled with this screwy model answer makes me think the graders knew this was hardly a good question.

10-02-2002, 05:49 PM
I caught those same problems mayreeh.

I did so well on this question I ended up with a '1' on it.

No, that doesn't mean first place.

I would assume (from the course of reading) that the model answer is incorrect. At each time period the person has a SF of 0 or 1.

During the exam last year I think I was trying to do something else.

Thanks, for the replies.