Preview Questions Actuary | Role Specific Skill

Question 1: When pricing a pension plan annuity, which factor is most critical for determining the cost of purchasing the annuity?

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Salary increase assumptions

Inflation rate assumptions

Interest rate assumptions

Mortality rate assumptions

Question 2: When assessing the credit risk of a corporate bond portfolio, which factor is most important in determining the credit rating of a bond issuer?

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The total amount of debt outstanding

The issuer's financial strength and creditworthiness

The bond's yield to maturity

The duration of the bond

Question 3: What is the main challenge when using ARIMA models for forecasting financial data in the BFSI industry?

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Adjusting for non-stationarity in data

Accounting for structural breaks in time series

Estimating the volatility of assets

Predicting future asset correlations

Question 4: Under Solvency II, the risk margin is used to determine:

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The premium for reinsurance contracts

The capital buffer required to absorb future insurance liabilities

The investment return for policyholders

The actuarial assumptions used in pricing

Question 5: When using Monte Carlo simulations in insurance risk models, which of the following is most critical for accurate results?

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Minimizing the number of iterations in the simulation

Choosing an appropriate probability distribution for inputs

Ensuring all inputs are normally distributed

Using deterministic methods

Question 6: In asset-liability management (ALM) for banks, what is the main objective of duration matching in financial modeling?

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To diversify the investment portfolio

To align the interest rate sensitivity of assets and liabilities

To minimize credit risk

To maximize the return on investments