Preview Questions Actuary | Role Specific Skill

Question 1: Which actuarial tool is used to assess the financial impact of catastrophic events on an insurance portfolio?

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Principal Component Analysis

Linear Regression

Monte Carlo Simulation

Cluster Analysis

Question 2: How do "Monte Carlo Simulations" help in quantifying risk in financial portfolios, and what are the primary challenges in using them for long-term forecasting?

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Monte Carlo simulations provide a way to estimate the distribution of portfolio returns by running numerous random simulations, but they require assumptions about input distributions

Monte Carlo simulations are best used for short-term forecasting, not long-term

Monte Carlo simulations are irrelevant as they only apply to physical systems

Monte Carlo simulations are unnecessary if a simple linear model can be used

Question 3: Which method is most appropriate for forecasting the credit risk of a large portfolio of loans?

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Extreme Value Theory

Markov Chains

Linear regression

Logistic regression

Question 4: 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 5: Which model is commonly used for stress testing and scenario analysis in actuarial risk management?

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Markov chain models

Deterministic models

Exponential smoothing models

Monte Carlo simulations

Question 6: Which statistical test is most appropriate for comparing the mean loss amounts between two different insurance products over a period of 5 years?

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T-test for independent samples

ANOVA

Chi-square test for independence

Wilcoxon Rank-Sum test