Pricing of Products II MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Pricing of Products II, 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 Pricing of Products II 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 Pricing of Products II mcq questions that explore various aspects of Pricing of Products II problems. Each MCQ is crafted to challenge your understanding of Pricing of Products II 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 Pricing of Products II MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

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Pricing of Products II MCQs | Page 6 of 6

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Q51.
What is an important consideration in determining the price of insurance?

a.

Profit criteria

b.

Marketing strategies

c.

Investment opportunities

d.

Weather conditions

Discuss
Answer: (a).Profit criteria Explanation:Profit criteria, such as net present value, internal rate of return, and discounted payback period, are important considerations in determining the price of insurance. These criteria help insurers assess the profitability of insurance contracts and make informed decisions about pricing strategies.
Q52.
Which method is predominantly used for determining the price of insurance?

a.

Formula method

b.

Cash flow method

c.

Projection method

d.

Actuarial method

Discuss
Answer: (b).Cash flow method Explanation:While both the formula method and cash flow method are used for determining the price of insurance, the cash flow method is predominantly used in the insurance industry. This method involves projecting expected incomes and outflows into the future to determine the best premium rate.
Q53.
What is an important component of the price of insurance?

a.

Marketing expenses

b.

Administrative costs

c.

Cost of reserving and solvency

d.

Investment returns

Discuss
Answer: (c).Cost of reserving and solvency Explanation:The cost of reserving and solvency is an important component of the price of insurance. Insurers need to set aside reserves to meet future obligations and ensure solvency, which involves maintaining adequate capital reserves to cover potential liabilities.
Q54.
In an insurance company, a single decrement life table is used in calculation of premium in which of the following methods?

a.

Cash flow method

b.

Calculation method

c.

Formula method

d.

Premium method

Discuss
Answer: (c).Formula method Explanation:In an insurance company, a single decrement life table is used in the formula method of determination of premiums.
Q55.
Determine the notation that is used for the present value of 1 payable every year to a life aged x as long the life is alive before age x+n (the first payment of 1 is paid at the end of year 1 from commencement of contract).

a.

Ax: nך

b.

äx

c.

äx:nך

d.

ax:nך

Discuss
Answer: (d).ax:nך Explanation:nך is the present value of 1 payable every year to a life aged x as long the life is alive before age x+n (the first payment of 1 is paid at the end of year 1 from commencement of contract).
Q56.
Which of the following is assumed in the cash flow method?

a.

Present value of net cash flow

b.

Set of commission rates

c.

Expected income for each policy year

d.

Expected outgo for each policy year

Discuss
Answer: (c).Expected income for each policy year Explanation:For computation of commutation functions, we need a life table and also a set of interest rates.
Q57.
In life insurance product pricing, deaths are determined using a set of

a.

Morbidity rates

b.

Mortality rates

c.

Combination of morbidity rates and mortality rates

d.

50% morbidity rates and 50% mortality rates

Discuss
Answer: (b).Mortality rates Explanation:In life insurance product pricing, deaths are determined using a set of mortality rates
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