SOA Exam FAM Sample Question 4.14
Study guide: Exam FAM
A fund is established for the benefit of 400 workers all age 60 with independent future lifetimes. When they reach age 85, the fund will be dissolved and distributed to the survivors.
The fund will earn interest at a rate of 5% per year.
The initial fund balance, F, is determined so that the probability that the fund will pay at least 5000 to each survivor is 86%, using the normal approximation.
Mortality follows the Standard Ultimate Life Table.
Calculate F.
[A modified version of Question 3 on the Spring 2016 exam]
- A) 350,000
- B) 360,000
- C) 370,000
- D) 380,000
- E) 390,000
Answer this question and see the worked solution