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September 2013 question 24 - Profit testing

P

Polina Hadjipanayiotou

Member
Hello,

regarding part ii) of this question, in order to calculate the expected profit margin the reserves at each time t are required. To calculate reserves there are two methods, also shown in the solution, but when I tried to get the solution using the first method i don't get the same result. I understand that in part i) the premium is calculated using AM92 Select, but even if i recalculate it using AM92 Ultimate i still don't get the same result.

upload_2018-3-7_9-57-0.png

Any help would be appreciated.
Thanks.
 

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Yes you get a difference in answer as you have used the Reserve formula for endowment assurance which is actually due to rounding off. Both are correct 6269.42 and 6268.8289
 
Prayaag said:
Yes you get a difference in answer as you have used the Reserve formula for endowment assurance which is actually due to rounding off. Both are correct 6269.42 and 6268.8289
Click to expand...

Thank you very much for your reply, but when I recalculate the premium, which is now 6490.05 the reserve 1V is 4042.014. How come you got 6269.42 using the first formula?
 
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