Preview Questions Actuary | Role Specific Skill

Question 1: How do you handle non-stationary time series data when performing forecasting for claims?

Which action should you take?

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Use ARIMA with a seasonal adjustment

Fit the data with a log transformation

Ignore the non-stationarity as it's irrelevant

Difference the series to make it stationary

Question 2: In credit scoring models, what does the Area Under the Receiver Operating Characteristic (ROC) Curve (AUC) indicate?

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The optimal threshold for classification

The ratio of true positives to false positives

The accuracy of the model

The model's ability to distinguish between classes

Question 3: What is the most common method used to determine the funding requirements of a defined benefit pension plan?

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Projected unit credit method

Flat benefit method

Entry age normal method

Attained age method

Question 4: Which of the following is a common method used to forecast long-term liabilities in an insurance company?

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Using the Poisson distribution to model claims events

Assuming a constant claims ratio over time

Projecting cash flows using discounted cash flow models

Using historical claims data to extrapolate future losses

Question 5: Which of the following is a key assumption in the Black-Scholes model used in risk modeling for derivatives pricing?

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The market is not efficient and exhibits arbitrage opportunities

The asset price follows a uniform distribution

The asset price follows a lognormal distribution

The asset returns are independent of each other

Question 6: What method is typically used to price term life insurance policies that have no cash value and a fixed premium structure?

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Modified duration method

Present value of future claims method

Gross premium method

Net premium method