In the above question, I am abit confused how the exposure has been calculated for each policy year. I do understand how to get the mid-point for the fiscal year and policy year, but I am particularly confused about how the interpolation has been done, with some done for 10 months and others 12 months. I am not sure where it's in the question?
Question has been asked before - try searching before you post! https://www.acted.co.uk/forums/index.php?threads/april-2011-q8.9406/
I am confused on how the trend factor is being calculated. I understand how to derive 'years trend' but not sure about the trend factor. Can someone help? Thanks!
You're told inflation is 5%pa. So if x years of inflation applies, then the trend factor is 1.05^x. The examiners would expect ST8 students to be very comfortable with this, it's assumed knowledge from the CT subjects. You'll find you'll get more confident with this sort of thing just by playing around with the numbers on the page. So next time you see some calculations you don't understand, try plugging them into a spreadsheet or a calculator and mucking around with them yourself. You'll often find you can work out the answer on your own.
