Preview Questions Actuary | Role Specific Skill

Question 1: How does Solvency II treat the valuation of insurance liabilities?

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Using historical cost accounting

By using a market-consistent approach with risk-free discount rates

By assessing future cash flows and adjusting for tax impacts

By adjusting liabilities based on inflation rates

Question 2: In the context of mortality modeling, which distribution is commonly used to model the time between events?

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Lognormal distribution

Gamma distribution

Exponential distribution

Weibull distribution

Question 3: Which of the following is an appropriate method for analyzing claim frequency data?

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Binomial Distribution

Uniform Distribution

Normal Distribution

Poisson Distribution

Question 4: In actuarial risk modeling, which method is best suited for dealing with multicollinearity in explanatory variables?

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Logistic regression

Principal Component Analysis (PCA)

Ridge regression

Ordinary Least Squares (OLS)

Question 5: In actuarial science, what is the main purpose of using a copula in multivariate financial modeling?

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To simulate the joint distribution and dependencies between multiple financial variables

To perform principal component analysis on financial data

To model the marginal distributions of individual variables

To create a linear combination of financial indicators

Question 6: How do you use "Cash Flow Testing" in financial modeling for insurance companies, and what are the key challenges in ensuring that future cash flows are accurately predicted?

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Cash flow testing only applies to life insurance products, not to general insurers

Cash flow testing models future inflows and outflows to assess an insurer's liquidity and solvency, with challenges in forecasting policyholder behavior and claims

Cash flow testing is irrelevant as insurance companies are always profitable

Cash flow testing is unnecessary if the insurer has sufficient reserves