MECE 003: ACTUARIAL ECONOMICS: THEORY AND PRACTICE
Section-A
Answer the following questions in about 700 words each. Each question carries 20 marks. 2X20=40
1. Discuss the important aspects of insurance sector that are regulated.
2. Describe the structure of a Dynamic Financial Analysis (DFA) model. While building a DFA model what practical issues will you consider for selecting the interest rate?
Section B
Answer the following questions in about 400 words each. Each question carries 12marks. 5X12=60
3. Explain the multi-period binary model of a forward contract. Discuss the Cox-Ross-Rubinstein model.
4. How do the modern theories of finance offer new valuation principles for unit-linked insurance?
5. Explain the Multiple Decrement Theory.
6. What is a ‘life annuity contract’? How is its ‘actuarial present value’ determined?
7. What is extreme value theory (EVT)? What are its limitations?
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