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Sept 20 Q3 i)

A

Actuary@22

Ton up Member
Hi

In Q-3 i)
I am a bit confused if in such questions(even in other past year papers) where interest rates are changing so does that imply that even the discount rates used for BEL and RM will change and so will impact them?
And if it implies a change in discount rate or not,how do we decide that?
 
Actuary@22 said:
Hi

In Q-3 i)
I am a bit confused if in such questions(even in other past year papers) where interest rates are changing so does that imply that even the discount rates used for BEL and RM will change and so will impact them?
And if it implies a change in discount rate or not,how do we decide that?
Click to expand...
The risk-free rate will likely change when interest rates change so it is a fair assumption to say that the valuation discount rate changes too and therefore, yes, BEL and RM would then be impacted.
 
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