Difference between data and assumptions + parameters sheet

[jonathans]

1. How do I know the difference between data and assumptions?

For example in Feb 2016 paper 1, in my opinion only the interest rates are data (observed in the market) and everything else is assumptions, such as future spending and income.

Data = observable/collected from some where
Assumption = something that I didn't actually observe.

Any tips/ideas?

2.
Also - sometimes the answers have a parameters sheet and sometimes it's in the worksheet themselves - am I free to do however I please in the exam? or are there rules about this?

Thanks!

 

[Sarah Byrne]

Hi Jonathan

1. Generally things that are inputs that could vary are parameters (such as interest rates, lapse rates, expenses etc). In other subjects these are referred to as "assumptions" which might help you think about them. Just remember that in CA2 assumptions are slightly different (eg an assumption could be claims are paid at the end of the year). They will generally be numerical values. Data will generally be provided and could be policy data, claims records etc. It is likely to have multiple records.

2. You are absolutely free to do what you want. Wherever you decide to include them, make your parameters clear (maybe highlight them in a different colour) and remember to take care over naming of parameters (if used and you have the same parameter on multiple worksheets). Personally I prefer to keep them on a separate sheet as then I know where they are, and so does another user. But it is personal preference. As long as you document whatever you do in the audit trail you're fine!

Sarah