CM1 Specimen Paper

[ldr]

Hi

I was working my way through the CM1 Specimen Paper on the IFOA website and I’m currently confused about Question 9, 15iii) and 16iii)

Question 9 is regarding a multiple state transition model
For question 9 in the solutions it states that p(x)=1-e^(-0.05t)

However this isn’t what is said in the notes? My final answer for this this question was 31606 whereas the solution was 7740. Can you please advise what is the correct formula for p(x)

Question 15 iii) it says the Benefit is paid immediately on death however the DSAR in the notes doesn’t seem to adjust for this by multiplying the death benefit by 1.04^0.5?

Question 16iii) it looks like they have summed up the terms incorrectly. When I sum up their terms I get 1720 whereas they have 2700

Are these mistakes in the solution or am I missing something fundamental here?

Thanks for your help

 

[Calm]

Question 9 is regarding a multiple state transition model
For question 9 in the solutions it states that p(x)=1-e^(-0.05t)

However this isn’t what is said in the notes? My final answer for this this question was 31606 whereas the solution was 7740. Can you please advise what is the correct formula for p(x)

I don't have ActEd's CM1 notes, but based on NTU's CT4 and CT5 notes, since there are no transitions back into the healthy state, it means that the formula for continuously remaining in the same state can be used, which is given as

where g and j represent the possible states (in this case healthy/critically ill/dead), t=10 and µ's are constant in the question.

Question 16iii) it looks like they have summed up the terms incorrectly. When I sum up their terms I get 1720 whereas they have 2700

Are these mistakes in the solution or am I missing something fundamental here?

Thanks for your help

Seems like the 1720 figure is what I got too. Not only that, but this is actually related to question 23 from that IFoA paper.

 

[ldr]

I don't have ActEd's CM1 notes, but based on NTU's CT4 and CT5 notes, since there are no transitions back into the healthy state, it means that the formula for continuously remaining in the same state can be used, which is given as
View attachment 1192
where g and j represent the possible states (in this case healthy/critically ill/dead), t=10 and µ's are constant in the question.

This is what I thought too. Did you get an answer yourself for that question? instead of p(x) it looks like it uses aq(x) which I can’t understand

 

[Lucy England]

The solution for Q9 on the Institute's website is incorrect - the correct answer is 31,606.

For Q15 (iii), I agree that the sum assured should be multiplied by (1+i)^(1/2) to reflect the timing of the benefit payment. This is the approach taken in ActEd's solution to the original exam question (CT5 April 2010 Q12) in the revision notes.

I agree that the terms in the sum in Q16 (iii) don't sum correctly.

Unfortunately ActEd does not have any control over the material on the IFoA website. However, we have told them about the issues with the specimen paper and asked for them to be corrected, so hopefully this will be fixed soon!

 

[DMF]

I was just looking at the solution for CT5 April 2010 Q12, and I don't see any reference to (1+i)^(1/2) in the solution. So, I just wanted to check that I hadn't missed anything in either solution, or a broader point more generally.

Thanks

 

[Lucy England]

It looks like this is Q15 on the specimen paper. Which part of the solution are you referring to? It's in the solution for part (i) - see below. For part (iii) it's already been pointed out by ldr that the (1+i)^(1/2) is missing in the solutions.

 

[DMF]

Thanks Lucy. My bad, I had missed the disjoint between part (i) and (iii).