CAS Exam 6C Spring 2018, Question 13

Study guide: Exam 6C

Part a (0.75 points)

Briefly describe how the following investments will be recorded in an insurance company's financial statements:

• i. Held-to-maturity bonds
• ii. Available-for-sale bonds
• iii. Held-for-trading bonds

Part b (2 points)

Describe the likely impact of a reduction in the yield to maturity of held-for-trading bonds on each of the following components of the Minimum Capital Test (MCT) formula:

• i. Margin for unpaid claims
• ii. Margin for premium liabilities
• iii. Margin for interest rate risk
• iv. Margin for operational risk

No current syllabus covers this question; it is kept for the record.

Answer this question and see the worked solution

Concepts tested

• MCT
• Financial Asset Classification
• Interest Rate Risk
• Financial Statements
• Operational Risk Margin
• Insurance Risk Margin
• Market Risk Margin

More questions from this set

• CAS Exam 6C Spring 2018, Question 12
• CAS Exam 6C Spring 2018, Question 14