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SP7 Practice question 26.4

Discussion in 'SP7' started by JayR, Jul 3, 2019.

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  1. JayR

    JayR Member

    Hello,

    Please could you explain how to obtain the split for the investment income (155,090) between "initial capital" (126,825) and "premiums less claims and expenses" (28,265) in SP7 practice question 26.4.

    Thanks

    JR
     
    JayR, Jul 3, 2019
    #1
  2. Dan__2

    Dan__2 Member

    I'm waiting on SP7 results tomorrow, so don't fully trust me! But...a quick look I think you've just got lost in the detail of the question.

    Capital at the start of the year was 1m and that's accumulating at 1% per month I.e.
    1m x (1.01)^12 = 1,126,825
    So, +126,825 from the initial capital.

    The remainder/balancing item therefore must be the return earned on premiums.
     
    Dan__2, Jul 3, 2019
    #2
  3. JayR

    JayR Member

    Ahh that looks right. Thank you!
     
    JayR, Jul 3, 2019
    #3

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