CAS Exam 7 Spring 2017, Question 10
Study guide: Exam 7
An actuary is reviewing the diagnostic results of a bootstrapping model.
Part a (1 point)
Construct and label a plot of residuals that would indicate a calendar year trend due to inflation which is not reflected in the model, and describe how the residual pattern shows inflation.
Part b (1 point)
Construct and label a plot of residuals that would indicate heteroscedasticity in development ages 36 and 48 compared to development ages 12 and 24, and describe how the residual pattern shows heteroscedasticity.
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