Actuarial Outpost Monthly stuff
 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

 Fill in a brief DW Simpson Registration Form to be contacted when our jobs meet your criteria.

#1
04-18-2006, 02:19 PM
 GosuJohn Member CAS Join Date: Sep 2005 Studying for CAS 7 Favorite beer: Wachusett Blueberry Posts: 4,263
Monthly stuff

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.
#2
04-18-2006, 04:21 PM
 mlschop Member SOA Join Date: Sep 2005 Posts: 29,298

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.
__________________

#3
04-18-2006, 04:24 PM
 AmInEm Member SOA Join Date: May 2005 Location: Montreal, QC Studying for FETE Posts: 431

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.
#4
04-18-2006, 04:26 PM
 mlschop Member SOA Join Date: Sep 2005 Posts: 29,298

Quote:
 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.
__________________

#5
04-20-2006, 09:45 PM
 Jim Daniel Member SOA Join Date: Jan 2002 Location: Davis, CA College: Wabash College 1962 (!) Posts: 1,732

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
__________________
Jim Daniel
Jim Daniel's Actuarial Seminars
www.actuarialseminars.com
jimdaniel@actuarialseminars.com
#6
04-20-2006, 10:58 PM
 GosuJohn Member CAS Join Date: Sep 2005 Studying for CAS 7 Favorite beer: Wachusett Blueberry Posts: 4,263

Quote:
 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
#7
04-21-2006, 10:21 AM
 rawl316 Member Join Date: Nov 2001 Location: I wake up in the morning and I piss excellence Favorite beer: Blue Moon Posts: 13,576

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
__________________
Quote:
 Originally Posted by win diesel Yap! Yap! Yap!
#8
04-21-2006, 10:58 AM
 AmInEm Member SOA Join Date: May 2005 Location: Montreal, QC Studying for FETE Posts: 431

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.
#9
04-21-2006, 11:19 AM
 Jim Daniel Member SOA Join Date: Jan 2002 Location: Davis, CA College: Wabash College 1962 (!) Posts: 1,732

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
__________________
Jim Daniel
Jim Daniel's Actuarial Seminars
www.actuarialseminars.com
jimdaniel@actuarialseminars.com
#10
04-21-2006, 11:22 AM
 rawl316 Member Join Date: Nov 2001 Location: I wake up in the morning and I piss excellence Favorite beer: Blue Moon Posts: 13,576

Quote:
 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.
__________________
Quote:
 Originally Posted by win diesel Yap! Yap! Yap!

 Thread Tools Display Modes Linear Mode

 Posting Rules You may not post new threads You may not post replies You may not post attachments You may not edit your posts BB code is On Smilies are On [IMG] code is On HTML code is Off

All times are GMT -4. The time now is 09:24 PM.

 -- Default Style - Fluid Width ---- Default Style - Fixed Width ---- Old Default Style ---- Easy on the eyes ---- Smooth Darkness ---- Chestnut ---- Apple-ish Style ---- If Apples were blue ---- If Apples were green ---- If Apples were purple ---- Halloween 2007 ---- B&W ---- Halloween ---- AO Christmas Theme ---- Turkey Day Theme ---- AO 2007 beta ---- 4th Of July Contact Us - Actuarial Outpost - Archive - Privacy Statement - Top