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SP7 Practice question 26.4

J

JayR

Member
Hello,

Please could you explain how to obtain the split for the investment income (155,090) between "initial capital" (126,825) and "premiums less claims and expenses" (28,265) in SP7 practice question 26.4.

Thanks

JR
 
JayR said:
Hello,

Please could you explain how to obtain the split for the investment income (155,090) between "initial capital" (126,825) and "premiums less claims and expenses" (28,265) in SP7 practice question 26.4.

Thanks

JR
Click to expand...

I'm waiting on SP7 results tomorrow, so don't fully trust me! But...a quick look I think you've just got lost in the detail of the question.

Capital at the start of the year was 1m and that's accumulating at 1% per month I.e.
1m x (1.01)^12 = 1,126,825
So, +126,825 from the initial capital.

The remainder/balancing item therefore must be the return earned on premiums.
 
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