Preview Questions Actuary | Role Specific Skill

Question 1: For a logistic regression model, which type of link function is used to model the probability of an event occurring (such as claim occurrence)?

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Logit link function

Identity link function

Log-log link function

Probit link function

Question 2: When using linear regression in actuarial analysis, what is typically assumed about the residuals?

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They should follow a Poisson distribution

They should be normally distributed with a mean of zero

They should have a mean equal to the dependent variable

They should have a variance of 1

Question 3: How does "Portfolio Optimization" apply to financial modeling in the insurance industry, and what methods do you use to balance risk and return?

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Portfolio optimization is irrelevant as it only applies to stock trading

Portfolio optimization models the trade-off between risk and return by adjusting asset allocations based on expected returns and variances

Portfolio optimization focuses on long-term profitability, not risk management

Portfolio optimization only works for non-financial data

Question 4: Which of the following is NOT a primary objective of Solvency II for the insurance industry?

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To improve transparency in financial reporting

To ensure that insurers have sufficient capital to cover risks

To establish uniform valuation methods for insurance liabilities

To impose fixed solvency capital requirements for all insurers

Question 5: When analyzing the persistence of insurance claims, which statistical technique would you use to model the time until a claim reoccurs?

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Cox Proportional Hazards Model

All of the above

Kaplan-Meier Estimator

Survival Analysis

Question 6: In a survival analysis, what is the Cox proportional hazards model used to estimate?

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The effect of explanatory variables on survival rates

The likelihood of an event occurring within a fixed time frame

The distribution of claim amounts

The variance of claim frequency