1.Simon established an actuarial practice several years ago. The business has beensuccessful. One of Simon's longest-serving actuaries has started to look foralternative employment and Simon is considering offering her a partnership in thepractice.

Discuss the implications for Simon of making this employee a partner. [5marks]

2. Explain why preference shares are generally accounted for as debt rather than equity.[5marks]

3. Explain why tax legislation does not permit depreciation as an expense for taxpurposes but grants a capital allowance instead. [5marks]

4.

An actuary has calculated a column of commutation functions for valuing a spouse's pension payable on death in service using the formula: zedwa X The benefit is based on pensionable salary, which is defined to be the average salary earned during the 24 months immediately prior to death. The pension is payable for life to the spouses of men and women who have been married for at least 6 months. The pension incorporates automatic annual increases of 5% pa (compound). Define all the symbols involved in this definition and state any assumptions made. [8]Two independent lives aged x and y have complete future lifetime random variables Ir and 7, respectively, and their joint complete future lifetime random variable is Ir . (i) An annuity of 1 pa is continuously payable until the second death of the two lives. Write down an expression for the present value random variable for this annuity, in terms of the random variables defined above only. [1] (ii) A man aged 60 exact and a woman aged 65 exact wish to purchase an annuity of f25,000 pa payable while they are both alive. If the man dies first, the annuity will reduce to $20,000 pa payable for the remainder of the woman's life. If the woman dies first, the annuity will reduce to $15,000 payable for the remainder of the man's life. (a) Write down an expression for the present value random variable of this benefit, assuming all annuities are payable continuously. (b) Hence or otherwise, calculate the expected present value of this annuity benefit, assuming payment is actually made in monthly instalments in arrears, on the following basis: Mortality: male life - PMA92C20 female life - PFA92C20 Interest: 4% pa [5] [Total 6]