SOA Exam FM Sample Question 424
Study guide: Exam FM-2
An insurance company plans to sell an annual perpetuity-immediate, where each payment after the first payment is 2% less than the previous payment. The company has chosen a price for this annuity and needs to calculate the amount of the first payment.
The annual effective yield rate is 7.8%, but the company mistakenly uses 8.7% and therefore incorrectly calculates 1500 for the first payment.
Calculate the correct first payment.
- A) 1299
- B) 1309
- C) 1345
- D) 1374
- E) 1385
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