Question

Why is establishing the importance of the investment assumption crucial in modeling?

a.

To determine overcharging for investment guarantees

b.

To assess the sensitivity of the investment assumption

c.

To minimize reserves for endowment products

d.

To increase caution in asset selection for term insurance products

Answer: (b).To assess the sensitivity of the investment assumption Explanation:Establishing the importance of the investment assumption is crucial in modeling to assess its sensitivity and ensure appropriate consideration in pricing and risk management decisions.

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Q. Why is establishing the importance of the investment assumption crucial in modeling?

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