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IAmTensai
08-31-2006, 10:23 PM
Regarding asm 3rd edition, section 1g (page 47), The section is about variable force of interest.

I am confused about question #7. (SOA 5/91 #14)
The question only has 2 lines:
"gives a delta(t) = (0.2t)/(1+0.1t^2)
then asks to Determine i2 (2 is subscript)"

The solution is to find the effective annual i for the 2nd yr, so it's a integration from 1 to 2.

However, i can't figure out where to pick up the clue that the question is asking for that particular i.
I thought the question was defective with missing information, but i don't see it in the erreta.

Should I always assume i(subscript 2) notation is equivalent to the annual effective rate of interest for the 2nd year?

Gandalf
08-31-2006, 10:40 PM
I'm not sure, but I think that is the notation Kellison, probably the only book on the syllabus in 1991, used. It may or may not be the notation in the current syllabus.

michael solomon
09-01-2006, 01:25 AM
yes. i subscript 2 means i in the second year, at least in ASM. you'll get used to all the different notations - i superscript (2) etc, as you go through the manual.

stbaugh13
09-01-2006, 08:47 AM
i subscript 2 does not mean i in the seond year. It means the nominal rate of interest paid semi-annually

Gandalf
09-01-2006, 08:53 AM
i subscript 2 does not mean i in the seond year. It means the nominal rate of interest paid semi-annually
No. The symbol for that would be superscript 2, in parentheses.

no driver
09-01-2006, 10:27 AM
i_{\small2} = interest earned in year 2

i^{\small(2)} = nominal rate of interest compounded semiannually

See pages 6 and 7 in ASM 3rd ed for the introduction of the i_t notation.

IAmTensai
09-01-2006, 11:17 PM
I guess if it's not stated, thats the assumption i will be making.

Thank you