Question
For a fully discrete 10-payment whole life policy of 10,000 on (x), you are given: Annual gross premium determined based on equivalence principle is
For a fully discrete 10-payment whole life policy of 10,000 on (x), you are given: Annual gross premium determined based on equivalence principle is 500. Expenses, incurred at the start of each year, is k plus 20% of premium in the first year and 10 plus 4% of premium in the renewal years. There is a settlement expense of 50 in case of death. An additional cost of 0.5 per 1000 is incurred at the start of every year. = 13.8, r+5 = 12.3, :10 = 7.276, +5:5 = 5.293. d = 0.05. (a) Determine k. (b) Calculate the total reserve at the end of year 5. (12 marks) (8 marks)
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An Introduction to the Mathematics of Financial Derivatives
Authors: Ali Hirsa, Salih N. Neftci
3rd edition
012384682X, 978-0123846822
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