Actuarial Outpost Course 3 May 01 #32
 Register Blogs Wiki FAQ Calendar Search Today's Posts Mark Forums Read
 FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

 Probability Old Exam P Forum

#1
11-07-2001, 04:25 PM
 Anonymous Guest Posts: n/a

I think I see a problem with this question and I am looking for confirmation. I'm not going to restate it here - it's availible on the SOA and CAS website. As I see it, Ax is equal to one so that would make the value of answer A undefined as (1-Ax) is in the denominator. This could not be the right answer as the expected value of L at t=0 with premiums determined by the equivalence principle is 0. So what's the deal?
#2
11-07-2001, 04:29 PM
 Macroman Member Join Date: Sep 2001 Location: you know where Favorite beer: Mountain Dew Posts: 3,858

Where is it available on the web site...I have not seen it as of yet....oops May 01

<font size=-1>[ This Message was edited by: Macroman on 2001-11-07 15:30 ]</font>
#3
11-07-2001, 04:40 PM
 Anonymous Guest Posts: n/a

Naturally, as soon as I post this I realize my mistake. They are not asking for an expression for the Expected value of L. So the fact that the expresion for answer A is undefined apparently doesn't matter.
#4
11-07-2001, 04:43 PM
 thing Member Join Date: Sep 2001 Location: Oregon Posts: 8,440

For this one, it's (b_t)*(A_x) = 1, not A_x = 1...
#5
11-07-2001, 04:57 PM
 Anonymous Guest Posts: n/a

I now realize that I viewed Ax is the expected value of the special insurance.
#6
11-07-2001, 05:01 PM
 phdmom Member SOA AAA Join Date: Nov 2001 Posts: 295

I'll agree with thing (I think). A_x is just a generic symbol for the present value of \$1 of continuous whole life ins. It doesn't depend on the particular benefits of a given situation, just on mortality & discount rates.
#7
11-07-2001, 05:02 PM
 phdmom Member SOA AAA Join Date: Nov 2001 Posts: 295

I got sidetracked before I submitted my post. (didn't want to look like I was beating you over the head!)