Premium Bases Margins MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Premium Bases Margins, a fundamental topic in the field of IC 92 Actuarial Aspects of Product Development. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Premium Bases Margins MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Premium Bases Margins mcq questions that explore various aspects of Premium Bases Margins problems. Each MCQ is crafted to challenge your understanding of Premium Bases Margins principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 92 Actuarial Aspects of Product Development tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Premium Bases Margins MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

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Premium Bases Margins MCQs | Page 7 of 7

Discover more Topics under IC 92 Actuarial Aspects of Product Development

Q61.
What is a key consideration in determining the risk discount rate?

a.

The profitability target set by the shareholders

b.

The regulatory requirements imposed by the government

c.

The return required by the shareholders on their invested capital

d.

The market share of the insurance company

Discuss
Answer: (c).The return required by the shareholders on their invested capital Explanation:A key aspect of the risk discount rate is the return required by the shareholders on the capital they invest in the insurance company, reflecting their expectations for profitability.
Q62.
Why is reserving an important aspect of pricing in insurance?

a.

To reduce the financial burden on policyholders

b.

To comply with regulatory requirements only

c.

To account for the cost of reserving while determining product pricing

d.

To maximize company profits

Discuss
Answer: (c).To account for the cost of reserving while determining product pricing Explanation:Reserving is essential in pricing insurance products to consider the cost associated with reserving, ensuring that product pricing accurately reflects the financial obligations of the insurer.
Q63.
How do the margins used in reserving differ from those used in pricing?

a.

Reserving margins are more aggressive than pricing margins

b.

Reserving margins are less prudent than pricing margins

c.

Reserving margins are much more prudent than pricing margins

d.

Reserving margins have no significant difference compared to pricing margins

Discuss
Answer: (c).Reserving margins are much more prudent than pricing margins Explanation:The margins used in reserving are much more prudent compared to those used in pricing, aiming to ensure that liabilities are adequately honored even in adverse future conditions.
Q64.
The approach not used for allowing for margins in cashflow approach is ____________.

a.

Using margins in the expected values

b.

Using a stochastic approach

c.

Using absolute amount addition of margin in each policy

d.

Using the risk element of the risk discount rate

Discuss
Answer: (c).Using absolute amount addition of margin in each policy Explanation:Using absolute amount addition of margin in each policy is not used, other three are used.
Q65.
In the CAPM formula, what is deducted from Em on the RHS?

a.

Ei

b.

rf

c.

bi

d.

Si

Discuss
Answer: (b).rf Explanation:rf (risk free rate) is deducted from Em.
Q66.
Application of margin will result into investment return assumption than best estimate?

a.

Higher

b.

Lower

c.

Both

d.

None

Discuss
Answer: (b).Lower Explanation:Application of margin will result into lower investment return assumption than best estimate.
Q67.
Which of the following APS defines the minimum MAD to be used for reserving?

a.

APS - 1

b.

APS - 2

c.

APS - 7

d.

APS - 6

Discuss
Answer: (c).APS - 7 Explanation:APS – 7 defines the minimum quantum of MAD.
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