State four general economic goals.
What is a traditional economy.
Describe the major differences between a n oligopolistic market structure and a monopolistically competitive market structure. Discuss how economics can be both scientists and policymakers. Discuss why price stability is such a vital macroeconomic goal? Discuss the consequences of inflation. Discuss why economic theories and principles are imprecise? Develop a table that shows the elements of a performance evaluation matrix. Discuss the five key evaluation questions that should be addressed. Describe the main uses of Project performance evaluation. (4 points) You are employing the methodology set forth in "A Framework for Assessing Risk Margins." Marshall, et al. summarize the methodology in use at the time as follows: Coefficients of variation for individual portfolios are determined. . Correlations between individual portfolios are determined. . The above values are determined separately for outstanding claim liabilities and premium liabilities. . A statistical distribution is selected and combined with the above to determine the aggregate risk margin. (a) (2 points) State four concerns expressed regarding this methodology. (b) (2 points) Explain how each concern stated in part (a) is addressed by the framework discussed in the paper.(8 points) You are interested in determining unpaid claim estimates. The triangle of paid claims data you are working with, by accident year and development year, is presented below. It is assumed that all claims are fully developed after four years. Development Year Accident Year 2 3 4 8.000 15,000 21.000 23,100 10.000 15,000 18.000 12.000 15,000 14,000 One of the models suggested by Venter is the parameterized BF (Bornhuetter and Ferguson) model, where the expected emerged loss is a lag factor /(d) times an accident year parameter /(w). An iterative method can be used to find the /(d) and h(w) values that minimize the sum of the squared residuals. (a) (/ point) Calculate the natural starting values for /(1), /(2), /(3) and /(4) implied from the standard chain ladder method. These values should sum to 1. (b) (2 points) Calculate starting values for /(1), h(2), h(3) and h(4) using the f(d) values from part (a). The values of h(1), A(2). h(3) and /(4) that minimize the sum of the squared residuals are 21,209, 20,633, 23,626 and 30,435, respectively. (9) (2 points) Calculate the values of /(1). /(2). /(3) and /(4) that minimize the sum of the squared residuals. (d) (/ point) Estimate the unpaid claims for each of accident years 2, 3 and 4 using the parameterized BF model. (e) (/ point) Estimate the unpaid claims for each of accident years 2, 3 and 4 using the standard chain ladder method
