1. 

   actuarialstudent Made first post

   Dear Forum members,
   I had a question on September 2022 - CM2 A exam - Question 1iii)
   
   Why is the following equation used:
   E[U(w-P+X)] = U(w)
   When the Booklet 1 factsheet formula details that it should be:
   E[U(w-P-X)] = U(w)
   
   I was just wondering why it would be +X rather than -X
   
   Thank you

    

   actuarialstudent, Apr 5, 2023

   #1
2. 

   Steve Hales ActEd Tutor Staff Member

   In the exam question the X represents a win, whereas in the factsheet the X represents a loss.

    

   Steve Hales, Apr 6, 2023

   #2

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