test1_03 - ACT348F - TERM TEST 1 - OCTOBER 18, 2003 Print...

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ACT348F - TERM TEST 1 - OCTOBER 18, 2003 Print your name and student number clearly on each page 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 at least 6 digit accuracy . Answers are expected to have at least 4 digit accuracy. THIS IS A CLOSED BOOK TEST - NO BOOKS OR NOTES ARE ALLOWED. A calculator may be used 1. A 4-year fully discrete term insurance with face amount 1000 is issued at age B (premiums are scheduled for the lifetime of the policy). The effective annual interest rate is 25%, and the mortality probabilities are ; œ Þ#! ß ; œ Þ#& ß ; œ Þ%! ß ; œ Þ&! B B" B# B$ . The equivalence principle annual premium is . "!!!T œ #"*Þ%& BÀ%l " 3 (a) Formulate the 2nd year terminal prospective loss random variable (conditional distribution). 2 (b) Find the 2nd year terminal benefit reserve as the expected value of the loss random variable in part (a). 4 (c) Write the prospective form of the 2nd year terminal benefit reserve , "!!! Z # BÀ%l " and calculate it by calculating each of the factors in the expression (the premium is given above).
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test1_03 - ACT348F - TERM TEST 1 - OCTOBER 18, 2003 Print...

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