Question

What is the significance of the factor-based approach in calculating RSM?

a.

It simplifies the calculation process

b.

It provides accurate results without adjustments

c.

It eliminates the need for considering reserves

d.

It allows for variations in calculating the sum at risk

Answer: (a).It simplifies the calculation process Explanation:The factor-based approach simplifies the calculation process by using predetermined factors based on reserves and sum at risk, making it easier to determine the solvency margin.

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Q. What is the significance of the factor-based approach in calculating RSM?

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