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Review_part2 - ACF329 Practice Problems for Exam 1 Part 2...

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ACF329 Practice Problems for Exam 1: Part 2 Warning: this is not a sample test. It is merely a supplement for your preparation. Name: Instructions: You should use one of the SOA approved calculators on this worksheet. These problems are from the sample Exam FM problems you can access from the Society of Actu- aries webpages. Note regarding problems about dollar-weighted rate of returns (yield rates) : the problems will not specify whether you need the exact value or an approximation. You will need to decide what the appropriate strategy is for each problem. 1. Bruce deposits 100 into a bank account. His account is credited interest at a nominal rate of interest of 4% convertible semiannually. At the same time, Peter deposits 100 into a separate account. Peter’s account is credited interest at a force of interest of δ . After 7.25 years, the value each account is the same. Calculate δ . 2. Eric deposits 100 into a savings account at time 0, which pays interest at a nominal rate of i , compounded semiannually. Mike deposits 200 into a different savings account at time 0, which pays simple interest at an annual rate of i . Eric and Mike earn the same amount of interest during the last 6 months of the 8th year.
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