SOA Exam FAM Sample Question 5.6
Study guide: Exam FAM
For a group of 100 lives age x with independent future lifetimes, you are given:
(i) Each life is to be paid 1 at the beginning of each year, if alive
(ii) A_{x} = 0.45
(iii) {}^{2}A_{x} = 0.22
(iv) i = 0.05
(v) Y is the present value random variable of the aggregate payments.
Using the normal approximation to Y, calculate the initial size of the fund needed in order to be 95% certain of being able to make the payments for these life annuities.
[Question 6 on the Spring 2014 exam]
- A) 1170
- B) 1180
- C) 1190
- D) 1200
- E) 1210
Answer this question and see the worked solution