1.

q  2 q50  2 p50
2.5 50 q
0.5 52

 0.5 
 0.02   0.98     0.04 
 2 
 0.0298

ANSWER: B

220 3
S0  30   S0  50  
2. q30   250 4  440  375  65  13  0.1477
S0  30 
20
220 440 440 88
250

ANSWER: B

3. The 20-year female survival probability = e20 

The 20-year male survival probability = e30 

We want 1-year female survival = e 

Suppose that there were M males and 3M females initially. After 20 years, there are
expected to be Me 30  and 3Me 20  survivors, respectively. At that time we have:

1
3Me 20  85 85 17 9 10

30 
  e10     e      0.938
Me 15 45 9  17 

ANSWER: C
 E  Z    0.04e0.04t  e0.02t e0.06t dt

4. 0
 0.04 1
 0.04  e 0.08t dt  
0 0.08 2
 0.04e  e  e  dt  0.04
 1
E  Z 2    0.04 0.04 t 0.12 t

0 0.12 3
2
1 1 1
Var  Z        0.0833
3  2  12

ANSWER: E

5.  
A501 :3  v q50  p50v q501  p501vq52 
1
where: v 
1.04

q50  0.7  0.045   0.0315

p50  1  q50  0.9685
q501  0.8  0.050   0.040
p501  1  q501  0.960
q52  0.055

So: A501 :3  0.1116

ANSWER: D
6. The median of ‫ܭ‬ସ଼ is the integer ݉ for which

P ( K 48  m )  0.5 and P ( K 48  m )  0.5.

This is equivalent to finding ݉ for which

l48 m l48  m 1
 0.5 and  0.5.
l48 l48

Based on the ILT, we have m  30 since

l78  4, 522, 840 and l79  4, 522,840.

So: APV  5000 A48  500030 E48 A78

 5000  0.22892   5000  0.24193 0.36044 
 1422.14

ANSWER: A
7. The minimum premium to prevent lapse will be the premium such that AV5  0.

Let P be this premium.

 20,000 
AV5  0   AV4  0.95P  500   1.045  P  20,146.06
 1.045 

ANSWER: A

8. EPV  NET PREMIUM   EPV  EXPENSE LOADING   GROSS PREMIUM


 pe

A50
So: 1,000,000  p e  19,526

a50
So: p e  753.76

ANSWER: C

9. Let P be the net premium for year 1.

Then:

 1.01  10 
1.01 0.02    P  1416.93
5
0.99
P 1  0.99    0.01 
 1.05  1.05  1.05 

ANSWER: B
10. The policy is fully discrete, so all cash flows occur at the start or end of a year. There is a
loss if death occurs in year 1 or year 2, otherwise the policy was profitable.

Pr  death in year 1 or 2   1  e 2   0.113

ANSWER: D

11. APV  expenses   0.35G  8  0.15Ga30:4  4a30:9

 0.20G  4  0.15G a30:5  4a30:10
G a30:5  0.20G  4  0.15G a30:5  4a30:10  200,000 A30:10
1

200,000 A30:10
1  4  4a30:10
G
0.85a30:5  0.20
200,000 A30:10
1  200,000  A30  10 E30 A40 
 200(102.48)  (200)(0.54733) 161.32 
 2836.94
2836.94  4  4  7.7465 2871.926
G   801.35
0.85  4.4516   0.20 3.58386

ANSWER: C

12. V FPT  100,000 A553  100,000 P551 a553

3

A551
 100,000 A58  100,000 a58
a551
 
 0.24 1  0.27 
 100,000  0.27   
1  0.24 d
 
 d 
 3947.37

ANSWER: B
13. V   0V  P 1  i    25,000  1V  1V  qx
1

V   1V  P 1  i    50,000  2V  2V  qx1  50,000

2

  P 1  i   25,000q   P  1  i   50,000q  50,000

x x 1

  P 1.05  25,000  0.15   P  1.05  50,000  0.15  50,000

Solving for P, we get

61,437.50
P  28,542.39
2.1525

ANSWER: D

AV2   AV1  3000 1  0.07   10  1.05  

3.0
14.  50,000  AV2 
1000
 5113.211  0.003 AV2
5113.211
 AV2   5128.60
0.997

ANSWER: D

15. DPP  min t : NPV  t   0

NPV  0    0  550
300
NPV 1   0   1v  550   282
1.12
275
NPV  2   NPV 1   2v  282   62.91
1.122
75
NPV  3  NPV  2    3v3  62.91   9.53
1.123
150
NPV  4   NPV  3   4v 4  9.53   85.80
1.124
NPV  4   0  DPP  4

ANSWER: D
16. V
 505  220  30 1.05  10,000q53  666.2807
1  q53
4

The profit for policy year 4 is

42
4885 [(505  220  30)(0.01)  (30  34)(1.06)  (10,000  666.2807)(0.0068  )]
4885

 68,730.37

ANSWER: C

 
e
p

 G  187  0.25G  10  1.03
 
17.  
1V   38.7
e

0.992
38.7  0.992 
 0.75G   187  10  159.72
1.03
 G  212.97

ANSWER: B

18. At 66, the total retirement fund is 1,500,000 1.08  and is to be used to purchase a
 4
quarterly annuity equal to Xa66 so that:

1,500,000 1.08 1,620, 000

X    174, 923.30
3 3
a66  9.6362 
8 8

X 174, 923.30
Replacement Ratio    0.70
250, 000 250, 000

ANSWER: E
19. No projected salary for traditional unit credit method:
0V  (0.02)(10)(150,000) v
20
12 
20 p45a65  127,157.50
12 
V  (0.02)(11)(150,000)v19
1 19 p46a65

Let C = normal contribution

1
V  C  vp45 1V  C  0V  12,715.75
0
 10
11
 0V
10

ANSWER: A

20. Kaitlyn’s annual retirement benefit is

50, 000
5
1.02526  1.02527  1.02528  1.02529  1.02530   31  1  0.07  3    0.02 

 10,000  31 0.02  0.79  9.988563  48,923.98

ANSWER: D