Monthly stuff

[GosuJohn]

Can i approximate my way through the monthly stuff with ax(m) = ax - (m-1)/2m or do i have to learn all that other stuff that i obviously dont want to.

[mlschop]

at the GSU seminar, batten seemed really keen on using the approximation as opposed to the alpha/beta formula. however, you have to be careful if the answers are close in value (say, 0.001 apart). I don't believe the SOA has had a question that COULDN'T be done using the approx method...

...BUT...

...alpha and betas are on the syllabus - so it's possible for them to ask directly to calculate alpha or beta (not sure how likely this is, since this has nothing to do with life contingencies per se).

Besides...alpha and beta values are given to you for all useful values of m in the Exam M handouts. if they are asking for the a(m) approximation under UDD, i'd be surprised if m is anything that's not on that handout.

[AmInEm]

I think this approximation is valid only under UDD assumptions and it's for annuity-due's not immediate. Moreover, the values of alpha(m) and beta(m) are given in the tables ... you don't have to memorize anything. Usually m=2, 4, 6 or 12, they're all there.

[mlschop]

Originally Posted by AmInEm

I think this approximation is valid only under UDD

i'm pretty sure the approximation is close all the time, and the alpha/betas are only close under udd.

[Jim Daniel]

The approx is close only under UDD, for small interest rates, and small probabilities of death.

Just use adue(m) = [1 - A(m)] / d(m) and then---under UDD---A(m) = [i / i(m)] A , done numerically.

Jim Daniel

[GosuJohn]

Originally Posted by Jim Daniel

The approx is close only under UDD, for small interest rates, and small probabilities of death.

Just use adue(m) = [1 - A(m)] / d(m) and then---under UDD---A(m) = [i / i(m)] A , done numerically.

Jim Daniel

thx

[rawl316]

is there a reason other than the fact that it's a temp annuity that we can't use the approximation on this one?

http://www.math.ilstu.edu/krzysio/KO...ise-3-25-6.pdf

[AmInEm]

No ... since we're assuming UDD, it should work as well. The formula is:

ä(m)_x:n = alpha(m)*ä_x:n - beta(m)*(1-nEx).

Plugging in alpha and beta from the tables and using the values given in the problem ... I get ä(12)_x:5 = 4.154923539. I know it's not as close as his answer, but it would still allow you to go for answer C.

I hope this helped.

[Jim Daniel]

And, of course, the formula for the temporary mthly annuity-due in terms of the A(m) endowment insurance is also valid, and you can get A(m)endowment using UDD from Aendowment (being careful to isolate the pure endowment). that approach avoids memorizing a rarely needed formula.

Jim Daniel

[rawl316]

Originally Posted by GosuJohn

Can i approximate my way through the monthly stuff with ax(m) = ax - (m-1)/2m or do i have to learn all that other stuff that i obviously dont want to.

I meant approximating using that formula above. I would get 4.3 - 11/24, which is nothing close to any of the answers.