Answer the questions below.

Describe the four main drivers of the process of globalisation.

Discuss who gains and who loses as markets become continually more globalised.

Outline the benefits of international trade.

13.4 Suppose there are just two countries, A and B, and the only factor of production is labour. In

Country A it takes 10 hours to produce one unit of Good X and 2.5 hours to produce one unit of

Good Y. In Country B it takes 15 hours to produce one unit of Good X and 7.5 hours to produce

one unit of Good Y.

(i) State which country has a comparative advantage in the production of Good X.

(ii) State which country has an absolute advantage in the production of Good X.

(iii) State whether international trade will take place between the two countries if the terms

of trade were one unit of Good Y for one unit of Good X.

P P x m is the terms of trade and /MC MC x m is the opportunity cost ratio for a country. The

country will have maximised the gain from specialisation and trade when:

A P P MC MC xm x m

B P P MC MC xm x m

C P P MC MC xm x m

D / 1 P P x m

Explain the argument behind strategic trade theory.

Explain the role of the World Trade Organisation (WTO) in international trade.

a. For the insurance of Example 8.3.2, establish that n-1 Var(L) = 2 02(1+1) "Px Pxth 9xth. h=0 b. If 8 = 0.05, n = 20, and p,(t) = 0.01, t = 0, calculate Var(L) for the insurance in (a). A 20-payment whole life policy with unit face amount was issued on a fully discrete basis to a person age 25. On the basis of your Illustrative Life Table and interest of 6%, calculate a. 20 25 b. 19 25 C. 20 25 d. Var[20 L|K(25) = 20] e. Var[18L K(25) = 18], using Theorem 8.5.1. ion 8.6 Interpret the differential equations a. dt V = T, + [8 + M, (t ) ]. V - b, Hx(t) b. d dt V = m, + 8, V - (b, - , V) M.(t). If b, = V, V = 0, and T, = 1, t 2 0, show that V = TS,. Evaluate (d / dt) ([1 - V(A,)] px). Use (8.6.2) to write expressions for d d a. (Px . V) b. d . at (ut , V ) C. dt (upx . V ) and interpret the results. cellaneous Show that the formula equivalent to (8.4.6) under the hyperbolic assumption for mortality within the year of age is K+SV = Ul-s[(1 - s) ( x V + Tx) (1 + i ) + s *+1V]. Prove that [u' - P(A,)anP Px M,(t) dt = [1 - V(A)1 02 Px My (t) dt and interpret the result. For a different form of the Hattendorf theorem, consider the following: (K -k) K(x) = k, k + 1, ..., k+ m- 1 ho kmL = m-1 k+mV U" - V - > With Uh K(x) = k + m, k+ m+ 1,....and,forh=3,1,...,m1, {a K(x)=k,k+1,...,k+h1 Arm = Ubk'I-hd-'l \"' (\"av 'l' rm) KL!) = k + '1 vk+s+1v\"{k+sv+'r+s) K(x}=k+h+1,k+h+2,..,, Show that III1 _ h 51' .tmL _ 20 U 113+?! IIll: b. Var[leK(x) 3: k] = :2 \"an Var[Ak+th{x} 2: k]. =0 . Repeat Example 3.5.1 in terms of an insured from Example 14.4 who has survived to the end of the second policy year. . Repeat Example 3-5.2 in terms of a portfolio of 1,533 policies of the type described in Example 14.4 and discussed in Exercise 3.26. In Exercise 3.2? there is no uncertainty about the amount or time of payment for the insureds who have survived to the end of the fourth policy year. Redo Exercise 3.27 for just those insureds at durations 2 and 3. Write a formula, in terms of benet premium and terminal benet reserve symbols, for the benet reserve at the middle of the eleventh policy year for a 13,333 whole life insurance with apportionable premiums payable annually issued to (33). A 3-year endowment policy for a face amount of 3 has the death benet payable at the end of the year of death and a benefit premium of 3.94 payable annually. Using an interest rate of 23%, the following benet reserves are generated: End of Benet Year Reserve 1 3.66 2 1.56 3 3.33 ulate a. 11,: b' ll:iJI:+1 c. The variance of the loss at policy issue, [.L d. The conditional variance, given that the insured has survived through the rst year, of the loss at the end of the rst year, 11