SOA Exam FM Sample Question 342
Study guide: Exam FM-2
An investor opens a savings account with no initial deposit that pays a constant 4.5% annual force of interest. The investor deposits 700 at the end of every six-month period for 20 years.
The account balance immediately after the last deposit is X.
Determine which of the following is an equation of value that can be used to solve for X.
- A)
\displaystyle\sum_{n=0}^{39}700e^{0.0225n} = Xe^{-0.9} - B)
\displaystyle\sum_{n=0}^{39}700e^{-0.0225n} = Xe^{0.9} - C)
\displaystyle\sum_{n=0}^{39}700e^{-0.0225n} = Xe^{-0.9} - D)
\displaystyle\sum_{n=0}^{39}700e^{0.0225n} = Xe^{0.9} - E)
\displaystyle\sum_{n=1}^{40}700e^{-0.0225n} = Xe^{-0.9}
Answer this question and see the worked solution
Concepts tested
- Annuities
- Force of Interest
- Accumulated Value
- Annuity Immediate
- Level Payment Annuity
- Term of Annuity