test2_04sol

# test2_04sol - ACT348F TERM TEST 2 Print your name and...

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ACT348F - TERM TEST 2 - NOVEMBER 18, 2004 Print your name and student number clearly on each page This is a closed book test . Do all work on this question paper, with work for question 1 on this page (use both sides if necessary), work for question 2 on the next page, etc. All calculations should be done to . Answers are expected to have at least 4 digit accuracy. at least 6 digit accuracy 1. A fully discrete 2-year endowment insurance issued at age has a B death benefits defined as follows : . , œ &!!  Z ß , œ "!!!  Z " " # # The endowment benefit paid to survivors at age is 1500. B  # You are given that the annual effective interest rate is , and . 3 œ Þ# ; œ Þ#& ß ; œ Þ& B B" 4 (a) Show that the annual benefit premium for the policy is 814 (nearest \$1) . 4 (b) Find and using the recursive reserve formula. " # Z Z Hint: For the premium use 7 B5 5" 5" 7l 5œ! 7" 75" Z œ † = ; † Ð"  3Ñ † Ð, Z Ñ ÞÞ 1 ± Solution: (a) "&!! œ Z œ † = ; † Ð"Þ#Ñ † Ð, Z Ñ ÞÞ # B5 5" 5" #l 5œ!

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