Exam 2007 42

[Wmorrissey]

I just want to check that given the definitions in the current text, this answer is different. They are considering fixed expense as a ratio to losses, and we should be considering it as a percentage to earned

???

[Vorian Atreides]

First, check my sig line . . . one should always take the sample answers with a grain of salt with respect to "100% accuracy".

But agree that the sample answer isn't perfect. I think the answer should have used 1 - V - Q = 0.75 as the target LR and the indicated change would be (0.7647 + 0.07) / 0.75 - 1 = +11.3%. With credibility weighting, the final indication = +6.78%

[Invicta]

Originally Posted by Vorian Atreides

First, check my sig line . . . one should always take the sample answers with a grain of salt with respect to "100% accuracy".

But agree that the sample answer isn't perfect. I think the answer should have usede 1 - V - Q = 0.75 as the target LR and the indicated change would be (0.7647 + 0.07) / 0.75 - 1 = +11.3%. With credibility weighting, the final indication = +6.38%

Thanks for posting this. Like badmaj, I thought "What the heck?" when I saw the solution. Btw, I think the final indication should be 6.78% by (0.6*1.113 + 0.4*1) -1

[Vorian Atreides]

Originally Posted by Invicta

Thanks for posting this. Like badmaj, I thought "What the heck?" when I saw the solution. Btw, I think the final indication should be 6.78% by (0.6*1.113 + 0.4*1) -1

You're correct; post fixed.

btw, you can also do credibility weighting as 0.113 x 60%. You might still write out everything, but you can do the computation this way (save a few key strokes and reduce "human errors". )

[JasonScandopolous]

Cool, I had just done this problem and looked this thread up earlier today, glad to see it's getting more use. The next practice problem like this from that W&M chapter loads the fixed expenses the "right" way, as was discussed in this thread.

[badmaj5]

Good to know that I'm not loosing my mind! I know the answers are not always 100% accurate, but it is frustrating not knowing if you're right or the answer is right at times.