SOA Exam FM Sample Question 304
Study guide: Exam FM-2
An insurance company has a liability of 750,000 due four years from now. To protect against interest rate risk, it decides to employ the technique of full immunization. Specifically, it decides to hold three assets, each providing a single cash flow as follows:
i) Asset X provides a cash flow of A_X, exactly two years from now.
ii) Asset Y provides a cash flow of 250,000, exactly four years from now.
iii) Asset Z provides a cash flow of A_Z, exactly five years from now.
The annual discount factor is v = 0.95.
Calculate A_X.
- A) 150,000
- B) 175,000
- C) 200,000
- D) 225,000
- E) 250,000
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