Preview Questions Actuary | Role Specific Skill

Question 1: What is the primary use of statistical smoothing techniques in forecasting insurance claim development?

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To estimate future interest rates

To determine the appropriate risk premium for policies

To reduce the noise in historical claims data and forecast future trends

To calculate the probability of a claim being made

Question 2: In survival analysis, what does the hazard function represent?

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The average time until an event occurs

The baseline risk of an event occurring regardless of time

The cumulative probability of an event occurring up to a specific time

The probability of an event occurring at a specific time, given survival until that time

Question 3: In a Defined Benefit (DB) pension plan, which actuarial assumption has the most significant impact on the present value of pension liabilities?

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Inflation Rate

Investment Return Rate

Mortality Rates

Salary Growth Rate

Question 4: Which of the following is a key assumption when using Monte Carlo simulations for financial forecasting?

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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

Question 5: In the context of risk-adjusted return on capital (RAROC), what does it measure?

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The risk-adjusted profitability of capital allocated to a business unit

The return earned in excess of the risk-free rate

The total return of an investment portfolio

The correlation between different asset classes

Question 6: Which of the following is most commonly used to model credit risk in actuarial risk modeling?

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Exponential distribution

Poisson distribution

Normal distribution

Credit default models such as the Merton model