Preview Questions Actuary | Role Specific Skill

Question 1: When analyzing the claim severity in property insurance, which statistical measure best represents the average claim amount?

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Variance

Mean

Median

Standard deviation

Question 2: How does "Duration Matching" work in financial modeling for insurance, and what challenges arise when matching the durations of assets and liabilities?

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Duration matching is only used in bond portfolio management, not insurance

Duration matching ensures that the duration of assets aligns with liabilities to manage interest rate risk, but challenges include adjusting for reinvestment and liquidity risks

Duration matching is unnecessary if the insurer holds long-term assets

Duration matching is irrelevant in financial modeling as it complicates risk analysis

Question 3: When interpreting a Gini coefficient of 0.65, what does this imply about the inequality in the data?

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There is no inequality in the data

The data is evenly distributed

There is a high degree of inequality

The data is normally distributed

Question 4: What is the focus of the Dodd-Frank Act in the context of the BFSI industry?

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To regulate pricing for financial instruments in the EU

To govern capital adequacy ratios for insurance companies

To standardize insurance contracts across U.S. states

To ensure the stability of the U.S. financial system by reducing systemic risk

Question 5: In actuarial financial forecasting, what is the function of a liability adequacy test?

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To forecast claim volume for specific policies

To estimate future profit margins

To calculate the company's risk exposure

To determine whether reserves are sufficient to meet future claims

Question 6: Which method is commonly used to forecast future cash flows for insurance companies with a large number of policies and claims?

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Monte Carlo simulations

Moving average method

Deterministic modeling

Exponential smoothing