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CONFIDENTIAL
COURSE
ACTUARIAL MATHEMATICS II
COURSE CODE
ASC475
EXAMINATION
JANUARY 2013
TIME
3 HOURS
INSTRUCTIONS TO CANDIDATES
1.
2.
Answer ALL questions in the Answer Booklet. Start each answer on a new page.
3.
Do not bring any material into the examination room unless permission is given by the
invigilator.
4.
Please check to make sure that this examination pack consists of:
i)
ii)
CONFIDENTIAL
CONFIDENTIAL
CS/JAN 2013/ASC475
QUESTION 1
A couple of two independent lives, Adam (50) and Hawa (30), has purchased a joint-life
insurance with RM1 benefit subject to a constant force of mortality, fj. 0.05. Given 8 = 0.03,
calculate:
a
930-50
(5 marks)
"'
30:50
(5 marks)
c)
Var[T30:50]
(5 marks)
d)
^30:50
(5 marks)
QUESTION 2
A double decrement model has forces of decrement given by:
H{Jlt =
t"x + t
100-(x+t)
Find:
a) tP?}
b) g(t)
c) f(t,2)
(2 marks)
(5 marks)
(5 marks)
d) E[T(x)]
(8 marks)
QUESTION 3
a) A 30-year term insurance was purchased on Computer A (30) and Computer B (40). This
insurance provides the following benefits:
i) RM140,000 if Computer A breaks down before Computer B.
ii) RM180,000 if Computer B breaks down before Computer A.
CONFIDENTIAL
CONFIDENTIAL
CS/JAN 2013/ASC475
Given:
i)
Calculate the probability that at least one computer will break down
within 10 years.
(4 marks)
ii) Calculate the probability that Computer A will break down second
within 10 years.
(4 marks)
iii) Calculate the probability that the second break down occurs between
10th and 20th year.
(6 marks)
b) Z is the present value random variable for an insurance on the lives of Jack and Jill. This
insurance provides the following benefit:
i) RM500 at the moment of Jack's death if Jill is alive at that time; and
ii) RM1,000 at the moment of Jill's death if Jack is dead at that time.
Given:
Calculate E[Z].
(6 marks)
QUESTION 4
Students enrollment for a Degree in Actuarial Science is based on the following multiple
decrements model:
1000 students enroll the course at t = 0.
Students leave the course due to:
> Decrement 1 (Failure);
^ =Y
0 < t < 4.
2)
> Decrement 2 (All other causes); ^
= 0.04
0 < t < 4.
48 students are expected to leave the course during their first year due to all other
causes.
CONFIDENTIAL
CONFIDENTIAL
CS/JAN 2013/ASC475
Find:
a) Y.
(5 marks)
b) The number of student who remains in the course in the third year.
(7 marks)
c) The expected number of students leaving the course due to failure in the
fourth year.
(8 marks)
QUESTION 5
a) Suppose an employee ages 25 obtained his current annual salary of RM42.000 until age
of retirement at 60. The employee and his employer each contribute 2% of his annual
salary each year payable continuously throughout his service with the company. Given
that:
Sx = (1.08)x,
CONFIDENTIAL