CAS Exam 9 Spring 2018, Question 21
Study guide: Exam 9
Given the following formula:
\frac{T}{S} = \frac{I}{A} \times \left(1 + \frac{R}{S}\right) + \frac{U}{P} \times \frac{P}{S}
Part a (0.75 points)
Identify the three returns that make up the equation and, for each return, briefly explain whose viewpoint is represented.
Part b (0.5 points)
In the equation it could appear that premium (P) has no effect on the total return on surplus (T/S). Briefly describe two possible interactions between the components of this equation that would make this conclusion incorrect.
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