E
Egkauston
Member
I am having a little trouble understanding certain aspects of actuarial funding (chapter 14).
Firstly, I fail to see the link between the method of holding the present value of the unit fund with the description given in the introduction (pg 1) of the present value of future initial expense charges being deducted from the reserve.
Secondly, I am struggling to understand how the interest rate for the present value determination is obtained. That is, I do not understand the argument used to obtain that it should be less than the management charge.
Any explanation of the above concepts would be greatly appreciated. If this has already been answered adequately in another thread, I apologise for asking it again, and ask that you direct me to the appropriate thread.
Firstly, I fail to see the link between the method of holding the present value of the unit fund with the description given in the introduction (pg 1) of the present value of future initial expense charges being deducted from the reserve.
Secondly, I am struggling to understand how the interest rate for the present value determination is obtained. That is, I do not understand the argument used to obtain that it should be less than the management charge.
Any explanation of the above concepts would be greatly appreciated. If this has already been answered adequately in another thread, I apologise for asking it again, and ask that you direct me to the appropriate thread.