CAS Exam 8 Fall 2018, Question 5
Study guide: Exam 8
An actuary is analyzing a partial residual plot of the driver age variable, which is shown below:
Part a (1 point)
Adding polynomial terms is one approach to address the non-linearity in the driver age variable.
Briefly describe two other alternative approaches and how they can be used to improve the fit of the driver age variable shown above.
Part b (0.5 points)
Briefly describe a downside to each of the two alternative approaches recommended in part a. above.
Answer this question and see the worked solution