Exam (elaborations)
CHAPTER 4 INTRO TO ACTUARIAL SCIENCE QUESTIONS AND VERIFIED ANSWERS|100% CORRECT|GRADE A+
- Course
- Institution
CHAPTER 4 INTRO TO ACTUARIAL SCIENCE QUESTIONS AND VERIFIED ANSWERS|100% CORRECT|GRADE A+
[Show more]
Seller
Follow
Content preview
CHAPTER 4 INTRO TO ACTUARIALSCIENCE QUESTIONS AND VERIFIED
ANSWERS|100% CORRECT|GRADE A+
most important risk management concept - ANSWER diversification of risk
Pooling arrangements (or risk pooling arrangements) - ANSWER reduce risk when losses are independent
(uncorrelated)
the individuals in the pool agree to evenly spit any accident costs that they might incur- they agree to
share the losses equally, each paying the average loss
the pooling arrangement changes the distribution of costs paid by each person- since the costs of one
now depend on the accident losses incurred by another
since the losses incurred by one person is independent of the other person's losses- the probability that
neither person has an accident is the probability that one does not have an accident times the
probability that the other does not have an accident
the pooling arrangement changes the probability distribution of accident costs facing each person- in a
pooling arrangement the standard deviation lowers while the expected cost does not change
pooling arrangements reduce the risk (uncertainty) for each individual- shows how risk can be reduced
through diversification- if people do not enter a pooling arrangement their accident costs would equal
their own losses- the average loss is more predictable than an individuals losses
it reduces the risk for each participant
if the distribution is very skewed - ANSWER there is a high probability of zero loss and a much smaller
probability of a large loss
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller sellervt. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75619 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now