CAS Exam 9 Spring 2013, Question 22
Study guide: Exam 9
The following information is available for an insurance policy:
- The expected loss amount for the policy is $500.
- The standard deviation of the loss is $3,000.
- The loss safety level is set at $10,000.
- The target investment return is 12%, with a standard deviation of 30%.
- The risk-free interest rate is 3%.
- No taxes or expenses are associated with the policy.
Using the swap technique, calculate the policy premium.
Part a (2.25 points)
No current syllabus covers this question; it is kept for the record.
Answer this question and see the worked solution