ACTUARIAL LTAM QUESTION

13. You have calculated the actuarial present value of a last-survivor whole life insurance of 1 on (2) and (y). You assumed: (i) The death benefit is payable at the moment of death. (ii) You assume that the future lifetimes of (2) and (y) follow a common shock model in which each life has a constant force of mortality with u = 0.06 and with a common shock component with constant force 0.02. (iii) 8 = 0.05. Your supervisor points out that these are independent future lifetimes, and each mortality assumption for (x) and for (y) is correct. Calculate the change in the actuarial present value over what you originally calculated. A).039 larger B).039 smaller C).093 larger D).093 smaller E) no change Select one: A..039 larger B. .039 smaller C..093 larger D..093 smaller E. no change