Hello,
For Q1, part i)
Text from the question below for reference-
then roll the model forward to the new valuation date using actual investment returns for the inter-valuation period and the year-end discount rate based on the updated asset yields
Does this not mean economic assumption change instead of variance (the solution says its economic variance) in analysis of surplus?
If run the model with the new longevity, followed by new expense assumptions is classified as non-economic assumptions change, I didn't understand why would the investment part wouldn't be economic assumptions change. By definition, 'variance' is the comparison of actual vs expected assumption. Please help in understanding the gap in my understanding here.
Thank you!
For Q1, part i)
Text from the question below for reference-
then roll the model forward to the new valuation date using actual investment returns for the inter-valuation period and the year-end discount rate based on the updated asset yields
Does this not mean economic assumption change instead of variance (the solution says its economic variance) in analysis of surplus?
If run the model with the new longevity, followed by new expense assumptions is classified as non-economic assumptions change, I didn't understand why would the investment part wouldn't be economic assumptions change. By definition, 'variance' is the comparison of actual vs expected assumption. Please help in understanding the gap in my understanding here.
Thank you!