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#1
04-22-2011, 12:14 AM
 actuariallady Member Join Date: May 2010 Posts: 50
2006 #34 and 2002#17

For 2006 #34 part c, the solution says 500/(1-26.7%-11.3%)=806.45
why not use 500*(1+11.3%)/(1-26.7%) ?

For 2002#17 part b, the solution just simply rerate the policy with rate after the change, why not use the parallelogram method to calculate the on-level factor and apply it to the earned premium?

THanks a lot !~
#2
04-22-2011, 01:14 AM
 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: 27,805

Quote:
 Originally Posted by actuariallady For 2006 #34 part c, the solution says 500/(1-26.7%-11.3%)=806.45 why not use 500*(1+11.3%)/(1-26.7%) ?
Are you sure you provided the correct problem for this?

What is the 11.3% for?

Quote:
 Originally Posted by actuariallady For 2002#17 part b, the solution just simply rerate the policy with rate after the change, why not use the parallelogram method to calculate the on-level factor and apply it to the earned premium?
Time yourself on how long it'd take you to calculate the on-level factors vs. calculating 200*132 + 100*112.20. (or 200*120*1.1 + 100*120*1.1*0.85).

Also, see my sig line--it might answer your first question as well.
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#3
04-22-2011, 08:47 AM
 booyah81 Member CAS AAA Join Date: Nov 2006 Studying for Freedom College: University of Florida Favorite beer: Gulden Draak Posts: 749

Agree with VA. The first problem I can't find so maybe you're mixing problems up. The second problem they give you exposures which should be the tip that parallelogram method is not the way to go here. If the gave you earned premium instead of exposures, then your method would be the right - and only - way to go.
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#4
04-22-2011, 08:56 AM
 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: 27,805

Quote:
 Originally Posted by Vorian Atreides Are you sure you provided the correct problem for this? What is the 11.3% for? Time yourself on how long it'd take you to calculate the on-level factors vs. calculating 200*132 + 100*112.20. (or 200*120*1.1 + 100*120*1.1*0.85) (200 + 100)*120*1.1*0.85. Also, see my sig line--it might answer your first question as well.
Sorry . . . needed to correct this.
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#5
04-22-2011, 08:58 AM
 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: 27,805

Quote:
 Originally Posted by booyah81 Agree with VA. The first problem I can't find so maybe you're mixing problems up. The second problem they give you exposures which should be the tip that parallelogram method is not the way to go here. If the gave you earned premium instead of exposures, then your method would be the right - and only - way to go.
Not true if they give either the exposures or the base rate.
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#6
04-22-2011, 09:14 AM
 booyah81 Member CAS AAA Join Date: Nov 2006 Studying for Freedom College: University of Florida Favorite beer: Gulden Draak Posts: 749

You get my point. Besides, I have yet to see an exam problem (pre-2008) that has enough information to let you choose which method you want to use to on-level premium i.e. there is always a very clear, "quick" way to on-level premium.
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#7
04-22-2011, 09:23 AM
 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: 27,805

Quote:
 Originally Posted by booyah81 You get my point. Besides, I have yet to see an exam problem (pre-2008) that has enough information to let you choose which method you want to use to on-level premium i.e. there is always a very clear, "quick" way to on-level premium.
You should see Future Fellows article on changes in direction on the types of problems Exam writers are being asked to write . . . I'll see if I can find the link.
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#8
04-22-2011, 09:28 AM
 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: 27,805

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#9
04-22-2011, 10:00 AM
 booyah81 Member CAS AAA Join Date: Nov 2006 Studying for Freedom College: University of Florida Favorite beer: Gulden Draak Posts: 749

Bottom line - just know your [stuff].
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#10
04-22-2011, 11:26 AM
 actuariallady Member Join Date: May 2010 Posts: 50

Thank you guys so much for the quick replies.
For the first question, it is on the TIA chapter 7 page 168, oh, it said ``revised``, that`s why it is not the same as the old exam question.
Basicly, for part a) it is asking the fixed expense ratio F=11.3%
part b) asking for the VPLR=73.3%
then part c), asking for the overall indicated ave premium, the solution used 500/(1-26.7%-11.3%)=806.45
but why not use 500*(1+11.3%)/(1-26.7%) ?
which is consistent with the pure premium formula.

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