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#541
10-24-2017, 12:10 PM
 ngxxx081 Member SOA Join Date: Nov 2008 Posts: 113

Quote:
 Originally Posted by actuary28 When can we use these formulas? Just when the benefits are proportional to the years of service worked?
Important to note whether mid-year benefits are offered. Sp 2017 WA #6 had mid-year benefits - the first time that SOA tested this and it proved difficult for candidates so the shortcut formulas weren't applicable there. I don't find it terribly difficult, but personally the setting up in two-step calculation format can be tedious and lead to some mistakes.
#542
10-24-2017, 01:26 PM
 unstoppableggj Member SOA Join Date: Jun 2015 Studying for Exam C Posts: 45

quickest question:

[when calculating net profit margin]

is it a rule of thumb for the discount rate (for calculating EPV of Premiums) to be equal to the hurdle rate used for calculating NPV?
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#543
10-24-2017, 01:52 PM
 NoFunnyStuff Member SOA Join Date: Jul 2009 Location: Green Bay, WI Studying for LTAM College: Georgia State University Alumni Posts: 193

Quote:
 Originally Posted by unstoppableggj quickest question: [when calculating net profit margin] is it a rule of thumb for the discount rate (for calculating EPV of Premiums) to be equal to the hurdle rate used for calculating NPV?
Discount rate is the Hurdle rate.
They can use both interchangeably...
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#544
10-24-2017, 02:06 PM
 actuary28 Member SOA Join Date: Sep 2016 Posts: 31

Quote:
 Originally Posted by ngxxx081 Important to note whether mid-year benefits are offered. Sp 2017 WA #6 had mid-year benefits - the first time that SOA tested this and it proved difficult for candidates so the shortcut formulas weren't applicable there. I don't find it terribly difficult, but personally the setting up in two-step calculation format can be tedious and lead to some mistakes.

That's exactly what I thought. Thanks for confirming!
#545
10-24-2017, 02:35 PM
 unstoppableggj Member SOA Join Date: Jun 2015 Studying for Exam C Posts: 45

Quote:
 Originally Posted by NoFunnyStuff Discount rate is the Hurdle rate. They can use both interchangeably...
Thanks.
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#546
10-24-2017, 02:47 PM
 toryrozansky Member SOA Join Date: Jul 2016 Posts: 34

I am having a lot of trouble with participating insurance (reversionary bonus questions). I tried to watch the CA videos but didnt find them very helpful.. Anyone have any good tricks when it comes to these types of questions?
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#547
10-24-2017, 03:38 PM
 unicorngrrrrrrrl Member SOA Join Date: Nov 2015 Posts: 167

Can we use mechanical pencils on the exam? Or must be tradition pencils?
#548
10-24-2017, 05:23 PM
 Turnyface Member SOA Join Date: Aug 2011 Location: Minnesota Studying for C College: Minnesota Favorite beer: Spotted Cow Posts: 38

Quote:
 Originally Posted by unicorngrrrrrrrl Can we use mechanical pencils on the exam? Or must be tradition pencils?
Mechanical is fine.
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#549
10-24-2017, 05:45 PM
 DarchArvor Member SOA Join Date: Jun 2016 Studying for everything Posts: 452

Quote:
 Originally Posted by cpolek1 Remember that the formula for Normal Cost is: $C_t=(v _1p_x^{00} _{t+1}V) -_tV + EPV(MYE)$ Notice that you have to discount the "Actuarial Liability at time 1" with interest & mortality to time 0, i.e. $v _1p_x^{00} _{t+1}V=E_0[_{t+1}V]$ = EPV_0(Benefit at time 1) = EPV_0(PUC Benefit at time 1 | employed to age 65) + EPV_0(Benefit at time 1 | termination in 3rd yr of employment i.e. at end of 2016) = $[3*65000*1.03^{24}*.013*v^{24}*\ddot{a}^{(12)}]*.94v + [3*65000*.013*v^{24}*\ddot{a}^{(12)}]*.06v$ The 2nd part of the equation above is for the benefit mentioned in (v) of the question: "On termination the benefit is deferred to age 65." At termination, the benefit amount is 3*65000*.013. Terminations occur at the end of the year, so the deferral period is the 24 years from 1/1/2017 to 1/1/2041 (v^24 * a(12)). And then the whole thing is discounted to time 0 with interest and mortality (.06*v) This question doesn't have mid-year exit benefits.
By mid-year exits I mean an exit that occurs between t and t+1, in this problem it's in the end of the year (i.e. 12/31/2016)

EPV_0(benefit at time 1) is evaluated at the beginning of 2017, therefore 1/1/2017.

From my understanding $[3*65000*1.03^{24}*.013*v^{24}*\ddot{a}^{(12)}]*.94v$ is EPV_0(benefit at time 1)

and

$[3*65000*.013*v^{24}*\ddot{a}^{(12)}]*.06v$ is EPV(exits between t and t+1, which is end of year for this problem, and generally mid year in other problems)

But with this logic of mine, I don't get why EPV_0(benefit at 0) takes into account termination between 1/1/2016 and 12/31/2016 by holding a supplementary amount of $[2*65000*.013*v^{24}*\ddot{a}^{(12)}]*.06v$
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Last edited by DarchArvor; 10-24-2017 at 05:56 PM..
#550
10-24-2017, 05:48 PM
 DarchArvor Member SOA Join Date: Jun 2016 Studying for everything Posts: 452

Quote:
 Originally Posted by toryrozansky I am having a lot of trouble with participating insurance (reversionary bonus questions). I tried to watch the CA videos but didnt find them very helpful.. Anyone have any good tricks when it comes to these types of questions?
It's my weak point as well, I will review this part of material as soon as I am ready for a final review

In one of the problems they divide by the probability of survival instead of multiplying by it in order to compute the reversionary bonus, I didn't get why. I will surely come back to you on this matter.
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Last edited by DarchArvor; 10-24-2017 at 05:51 PM..