1. You are thinking of moving to live in Nakuru. As part of your research into what it's like to live in Nakuru you have collected the following sets of data: ii) the maximum daily temperature each day since 1 January 2003 whether or not it rained for each day since 1 January 2003 the number of cyclists injured in road accidents since 1 January 2003. For each data set choose an appropriate state space and a time domain. In each case state whether the state space and the time domain are discrete or continuous, and give the units of measurement. Imagine that you have data for each process. Draw sketches to display these samples of data. 2. You have been commissioned to develop a model to project the assets and liabilities of an insurer after one year. This has been requested following a change in the regulatory capital requirement. Sufficient capital must now be held such that there is less than a 0.5% chance of liabilities exceeding assets after one year. The company does not have any existing stochastic models, but estimates have been made in the planning process of worst case scenarios. Set out the steps you would take in the development of the model. 3. Outline the benefits and limitations of modelling in actuarial work. 4. Describe the difference between a stochastic and a deterministic model. 5. Outline the factors you would consider in deciding whether to use a stochastic or deterministic model to study a problem.