Preview Questions Actuary | Role Specific Skill

Question 1: What is the primary function of a stress test in the context of banking risk assessment?

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To evaluate the performance of financial models

To assess the resilience of financial institutions under extreme but plausible scenarios

To determine the creditworthiness of individual borrowers

To optimize the asset-liability management strategy

Question 2: What is the primary advantage of using a Bayesian framework in financial forecasting for actuaries?

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It incorporates prior information and updates with new data

It allows for deterministic predictions

It requires fewer data points

It eliminates the need for scenario analysis

Question 3: In actuarial modeling, which method is often used to estimate the economic capital required to cover potential risks?

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Risk-based capital models

Profitability models

Cash flow projection models

Market risk analysis models

Question 4: In the context of insurance, which of the following best describes operational risk?

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The risk that a company's systems fail due to poor asset management

The risk that investment returns fall short of the target

The risk of financial loss due to system failures, fraud, or human error

The risk that underwriting models fail to predict claims accurately

Question 5: In the context of portfolio risk management, which statistical measure is commonly used to assess the volatility of returns?

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Mode

Range

Standard Deviation

Median Absolute Deviation

Question 6: When forecasting interest rates over time, which of the following models accounts for changing volatilities?

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Hull-White model

Cox-Ingersoll-Ross model

Vasicek model

Black-Scholes model