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Skipping Parts

P

ProCyclist

Member
Hi all,

So I am trying the CA2 2015 March paper and I got a bit stuck on the projecting forward the level annuity prices.

I can get as far as the AvsE (quite straight forward) but I find myself running short of time and there's no way I could get it.

My question therefore is,

1. Would it be acceptable to simply drop that part and alter the audit report to match my spreadsheet

e.g. objective = calculate the AvsE over the period of investigation.

and make the annuity part of the "next steps"?

2. Or should I simply make a (incorrect) assumption and discount the mortality rates by 4% (the total AvsE difference) and run with that?

Thanks
 
I'm not an examiner so I don't know. Either may be the right approach to try and get marks. But think you are right not just to abandon without comment. Possibly the next steps option is favourable because at least then you aren't showing a modelling weakness. Unfortunately like any exam, I'd say it's better to attempt all parts of a question and what you do should answer the question. If you resort to assumptions, you should definitely document them.

Work on your timing and hopefully you won't face such a dilemma in reality. If you study the solution that may help you figure out whether it was the theory or excel modelling that you were struggling on in this instance.
 
It doesn't matter what you do, as long as you clearly document what you have done. From memory, you get more marks for your documentation than the model, so I don't think you will lose many marks for using an incorrect assumption but will gain marks by including it in your documentation. You would also get follow through marks (which you wouldn't get if you missed that part out completely). You could use an incorrect discount rate, state it in your assumptions, and then say that you would calculate a more accurate projection in your next steps. Don't change the objective to match your spreadsheet, but be clear on the extent that your model has met your objective, and what the shortcomings are.

However, as bystander says, timing is critical. If you do find yourself struggling with the model, by all means simplify things for yourself and move on to the documentation.
 
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