{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ct010s06 - UNSW ACTL1001 Actuarial Studies and Commerce...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
UNSW ACTL1001 Actuarial Studies and Commerce Solutions Tutorial Exercises 6 Exercise 1 Now the payments are monthly, so we need a per month interest rate. The interest rate is 5% p.a. quarterly so the monthly rate is i where (1 + i ) 3 = 1 + 0 . 05 4 or i = 1 + 0 . 05 4 1 3 - 1 = 0 . 0041494 Present value is 1000¨ a 60 at rate 0 . 0041494 = 1000 (1 . 0041494) 1 - ( 1 1 . 0041494 ) 60 0 . 0041494 = 1000 × 53 . 23732 = 53 , 237 . 32 Exercise 2 Present value is 100 , 000 v 5 at 6% = 100 , 000 × 1 (1 . 06) 5 = 74 , 725 . 82 Exercise 3 Note: For Parts 1-3, one very important concept you will need to understand is how to setup a table (eg in a spreadsheet format) listing the cashflows, interest, PL and Asset values, and in particular the recur- sive/formula links between each item on the table. Please also find attached a spreadsheet which demonstrates these relationships. You should ensure that you can replicate this by hand as that is a great way of learning how each item (eg premiums, claims, expenses, PL, interest etc) relate to each other at a particular period and also between periods). 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
1. Premium will be given by (using the principle of equivalence) P ¨ a 5 = 100 , 000 v 5 + 8 , 000 + 0 . 02 P ¨ a n + 100¨ a 5 at 6% so that P = 1 (1 - 0 . 02) " 100 , 000 v 5 ¨ a 5 + 8 , 000
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}