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#1
02-27-2010, 03:35 PM
 Wmorrissey Member CAS Join Date: Jan 2008 Location: Chicago Studying for CAS 9 Posts: 254
Exam 2007 42

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

???
#2
02-27-2010, 09:23 PM
 Vorian Atreides Wiki/Note Contributor CAS Join Date: Apr 2005 Location: Garroting Deep Studying for CAS Exam 7 College: Hard Knocks Favorite beer: Sam Adams Cherry Wheat Posts: 27,768

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%
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Last edited by Vorian Atreides; 05-01-2011 at 10:48 PM.. Reason: correcting for math error
#3
05-01-2011, 05:35 PM
 Invicta Member Join Date: Jul 2010 Posts: 56

Quote:
 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
#4
05-01-2011, 06:14 PM
 Vorian Atreides Wiki/Note Contributor CAS Join Date: Apr 2005 Location: Garroting Deep Studying for CAS Exam 7 College: Hard Knocks Favorite beer: Sam Adams Cherry Wheat Posts: 27,768

Quote:
 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". )
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I find your lack of faith disturbing.

Wait until you have kids.

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#5
05-01-2011, 09:20 PM
 JasonScandopolous Member CAS Join Date: Jul 2010 Posts: 3,445

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.
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#6
04-10-2010, 12:22 PM
 badmaj5 Member CAS Join Date: Sep 2005 Location: Chicago, IL Posts: 454

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.

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