Preview Questions Actuary | Role Specific Skill

Question 1: What is the significance of "funded status" in the context of pension plans?

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It determines the eligibility criteria for pension benefits

It indicates the ratio of total assets to total liabilities of the pension plan

It represents the number of participants in the pension plan

It measures the investment performance of the pension fund

Question 2: What is the key assumption behind the use of the Generalized Pareto Distribution (GPD) in risk modeling?

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It models risks for continuous financial data only

It assumes heavy tails and extreme events

It assumes independent and identically distributed data

It models losses based on exponential decay

Question 3: In a scenario where the mortality rate for a specific group is plotted against age, what type of graph is most appropriate to interpret this data?

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A boxplot

A histogram

A time-series plot

A scatter plot

Question 4: Which of the following is the primary purpose of sensitivity analysis in risk management?

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To determine the correlation between different risk factors

To predict the exact value of the portfolio under various scenarios

To eliminate the impact of unknown risks

To measure the effect of changes in key assumptions on portfolio outcomes

Question 5: What does this suggest about the distribution?

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The data is right-skewed

The data is left-skewed

The data has no skewness

The data is normally distributed

Question 6: What does the beta coefficient represent in the context of Capital Asset Pricing Model (CAPM) risk modeling?

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The risk-free rate of return

The expected return of a diversified portfolio

The sensitivity of an asset's returns to market returns

The average return on an asset over a period of time