Preview Questions Actuary | Role Specific Skill

Question 1: In a financial model for a property and casualty insurer, how do you assess the impact of large catastrophic events on the overall portfolio?

Which action should you take?

Choose only one option

Implementing a Monte Carlo simulation

Using the correlation of losses with market returns

Applying a deterministic stress test

Using the Extreme Value Theory (EVT)

Question 2: What is the role of a "funding policy" in pension plan management?

Which action should you take?

Choose only one option

To determine the benefit formulas and payout structures

To outline the contribution rates and funding targets to ensure the pension plan remains adequately funded

To define the eligibility criteria for pension benefits

To establish the investment strategy for the pension fund

Question 3: How do you estimate the tail risk of an asset using Monte Carlo simulations?

Which action should you take?

Choose only one option

By adjusting for inflation in the portfolio

By running a large number of simulations and analyzing the worst 1% of outcomes

By using historical data to compute volatility

By calculating the average value of the asset over time

Question 4: When using a Monte Carlo simulation for portfolio forecasting, which of the following is most important?

Which action should you take?

Choose only one option

Using only past returns to estimate future performance

Assuming that asset returns are normally distributed

Randomly generating thousands of scenarios based on assumed distributions

Applying a deterministic forecasting model

Question 5: What is the purpose of using copulas in risk modeling?

Which action should you take?

Choose only one option

To model the dependency structure between different risk factors

To estimate the expected value of financial losses

To calculate the variance of a portfolio

To predict future asset returns

Question 6: Which of the following is a key assumption when using Monte Carlo simulations for financial forecasting?

Which action should you take?

Choose only one option

The future outcomes are deterministic based on historical trends

The market conditions will remain constant

The model assumes normal distribution of returns

The future outcomes are based on random sampling from known distributions