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Pricing using the formula approach

  • Thread starter SpringbokSupporter
  • Start date
S

SpringbokSupporter

Member
Hi guys,
Am I correct in saying that under the formula approach for pricing we would have the following equation:
EPV of Premiums = EPV of Benefits + EPV of Expense
If so, what discount rate is used in the formula approach?

Under the cashflow model it makes sense to use a risk-discount rate, but I don't think it would be appropriate in the formula approach (I think).
 
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