Preview Questions Actuary | Role Specific Skill

Question 1: What is the purpose of the Generalized Linear Model (GLM) in insurance risk modeling?

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To estimate the distribution of future claims

To adjust for inflation in claims data

To predict stock market movements

To model the relationship between risk factors and the outcome variable

Question 2: Which of the following models is commonly used for long-term financial forecasting in insurance companies?

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Monte Carlo Simulation

ARIMA (Autoregressive Integrated Moving Average)

Exponential Smoothing

GARCH (Generalized Autoregressive Conditional Heteroskedasticity)

Question 3: What is the primary benefit of applying a Generalized Linear Model (GLM) in financial forecasting?

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It can model non-linear relationships and account for variability

It can only model linear relationships

It focuses on time series data only

It assumes a constant variance in the data

Question 4: What is the significance of the "Greeks" in financial derivatives modeling within the BFSI industry?

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They are used to measure the creditworthiness of borrowers

They indicate the level of regulatory compliance required for derivatives trading

They quantify the market liquidity of financial instruments

They represent the fundamental drivers of option prices

Question 5: In assessing the risk of a life insurance portfolio, what is the most important factor when estimating the reserves required for future claims?

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The current financial market trends and interest rates

The expected mortality rates and policyholder behavior

The assets held in the insurance company's portfolio

The total number of claims paid in previous years

Question 6: What statistical technique would be most suitable to model extreme values in claim data for rare, high-cost events?

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Poisson distribution

Normal distribution

Log-normal distribution

Generalized Pareto distribution (GPD)