Actuarial Outpost SOA 2004 Nov, Problem #13
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#1
05-14-2005, 04:26 PM
 squareone Member Join Date: May 2005 Location: Nebraska Posts: 467
SOA 2004 Nov, Problem #13

Why can't you solve the problem as follows (it just doesn't come out with the right answer and I want to know why)

Let H, S, T be the expected values of healthcare for healthy, sick and terminated. e.g., H = E(H). Then:

H = 500 + (0.7 H + 0.1 S + 0.2 T)
S = 3000 + (0.3H + 0.6 S + 0.1 T)

Since T = 0 and only goes to itself, T = 0:

(1) 0.3H = 500 + 0.1S
(2) 0.4S = 3000 + 0.3H
0.4S = 3000 + (500+0.1S)
0.3S = 3500 -> S = 11666.70, H = 5555.56

Oh, now it works! Sure when I am doing a timed test I keep getting H = 3500, but NOOO when I go to post on the forum everything works out JUST fine.

#2
05-14-2005, 05:45 PM
 ontheroad Member SOA AAA Join Date: Jul 2004 Location: Atlanta, GA Studying for AFE College: UF/GSU Alumni Favorite beer: St Bernardus Posts: 144
Would this show up on Thurs?

This Markov Chain seems to go off into infinity. Are we responsible for knowing this material (taking the inverse of the matrix, etc.)? All the examples in the Daniel Study Note dealt with specific time periods.

What do you all think? Worth memorizing how to do this??
#3
05-14-2005, 07:26 PM
 Brutè Member Join Date: Dec 2001 Location: The 'shoe Posts: 2,330

This is no longer on the syllabus.
#4
05-14-2005, 11:16 PM
 squareone Member Join Date: May 2005 Location: Nebraska Posts: 467
Seems silly

That it's not on the syallabus anymore.

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