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UNIVERSITY OF ILLINOIS AT URBANACHAMPAIGN
Actuarial Science Program
DEPARTMENT OF MATHEMATICS
Math 476 / 567
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Actuarial Risk Theory
Fall, 2010
Homework Assignment # 1 (max. points = 10)
Due at the beginning of class on Thursday, September 2, 2010
You are encouraged to work on these problems in groups of no more than 3 or 4.
However, each
student must hand in her/his own answer sheet. Please show your work – enough to show that
you understand how to do the problem – and circle your final answer.
Full credit can only be
given if the answer and approach are appropriate. Please provide answers to two decimal places.
Note:
When calculating a percentage, please provide answers either as a proportion to
four decimal places (e.g., 0.xxxx), or as a percentage to two decimal places (e.g., xx.xx%).
(1)
I enter into a forward agreement with you, to sell my car to you for $4,000 on December
31, 2010.
On that date, my car is worth $3,725.
What is your net profit or loss on
December 31, 2010 from this agreement?
(2)
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 Spring '08
 Stepanov
 Statistics, Strike price, ABC Stock

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