Preview Questions Actuary | Role Specific Skill

Question 1: In financial modeling for insurance products, which model is primarily used to estimate the present value of future cash flows considering mortality rates?

Which action should you take?

Choose only one option

Life Table Analysis

Cox Proportional Hazards Model

Binomial Option Pricing Model

Black-Scholes Model

Question 2: How do you assess "Model Risk" in actuarial models, and what strategies do you employ to mitigate errors in model assumptions or predictions?

Which action should you take?

Choose only one option

Model risk can be ignored as long as the model is validated once

Model risk is irrelevant as models always produce accurate results

Model risk arises from errors in model assumptions or prediction accuracy, and it is mitigated by performing sensitivity analysis, backtesting, and using model validation techniques

Model risk is only relevant in regulatory compliance and not in day-to-day operations

Question 3: In the context of insurance, what is "moral hazard"?

Which action should you take?

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The risk that policyholders will experience a loss

The risk that an insurer will fail to pay claims

The risk that policyholders will engage in risky behavior because they are insured

The risk that claims will exceed the insurer's reserves

Question 4: What is "Interest Rate Sensitivity" in pension plan valuations, and how do you assess the impact of interest rate changes on pension liabilities?

Which action should you take?

Choose only one option

Interest rate sensitivity is only relevant in Defined Contribution plans

Interest rate sensitivity measures the effect of changes in interest rates on the present value of future pension liabilities, and it is assessed through stress testing and duration analysis

Interest rate sensitivity is irrelevant in pension plans as interest rates do not affect liabilities

Interest rate sensitivity should be ignored if the pension plan is well-funded

Question 5: Which of the following models would you use to forecast the claims frequency in a non-life insurance portfolio?

Which action should you take?

Choose only one option

Gaussian process model

Poisson regression model

Markov decision process

Normal distribution model

Question 6: Which of the following is the correct method for adjusting the discount rate in a liability-driven investment strategy for an insurance company?

Which action should you take?

Choose only one option

Apply an industry-specific risk premium

Adjust for inflation expectations

Adjust based on the insurer's solvency ratio

Use a risk-free rate plus a credit spread