This is an old exam question too. My question is about part ii - initial expense supportable. In solution on page-9 at the top (2008 version), I see the function A[40]:20 is evaluated using premium conversion relationship form a[40]:20 (two dots on 'a'). The 'd' in this relationship is calculated using interest of only 4%. It is true that a[40]:20 takes care of 4% interest up to age 55 and 5% later, but, is it correct to use only 4% for 'd'?? Appreciate inputs. Thanks, Raj
Can ActED tutors provide inputs?? I see ActEd tutors responding to some of the queries and clarifying questions. May I request them to take a look at my posts which remain unanswered for long time by now? Thanks a lot in advance. Thanks, Raj
I think this question is X2.5 in the current notes. I think the solution is fine as it is... EPV of annuity = E[(1-v^something)/d] where d is calculated using what interest rates actually are, ie 4%. It's only the mortality bit where we are using the special 5% rate because of the extra 1% mortality adjustment, Good luck! John
