Preview Questions Actuary | Role Specific Skill

Question 1: How do you calculate "Pension Obligation" under the "Projected Unit Credit" method, and what assumptions are involved in this calculation?

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The projected unit credit method is not used in pension calculations

The projected unit credit method disregards mortality assumptions and salary growth

The projected unit credit method calculates pension obligations based on the projected future benefits of participants, with assumptions including salary growth, mortality, and discount rates

The projected unit credit method is only used for insurance products and not pension plans

Question 2: Which standard under Solvency II governs the calculation of technical provisions for insurance companies?

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The Own Risk and Solvency Assessment (ORSA) standard

The Minimum Capital Requirement (MCR) standard

The Technical Provisions Directive (TPD)

The Solvency Capital Requirement (SCR) standard

Question 3: Which of the following statements best describes the Internal Capital Adequacy Assessment Process (ICAAP) under Basel III?

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It requires banks to comply with a solvency ratio

It mandates banks to maintain a fixed capital ratio

It assesses only the market risk exposure of banks

It requires banks to assess their internal capital needs based on their risk profile

Question 4: How do you estimate the tail risk of an asset using Monte Carlo simulations?

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By adjusting for inflation in the portfolio

By running a large number of simulations and analyzing the worst 1% of outcomes

By using historical data to compute volatility

By calculating the average value of the asset over time

Question 5: How do you incorporate "Solvency II" regulations into financial modeling for European insurers, and what impact do these regulations have on capital requirements?

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Solvency II sets out risk-based capital requirements, and financial models must incorporate market, credit, and operational risks to ensure solvency

Solvency II only affects the profitability of insurance firms, not their risk models

Solvency II is irrelevant for financial modeling and should be ignored

Solvency II is unnecessary for large multinational insurers

Question 6: What is "Bootstrap Resampling," and how is it applied in actuarial data analysis to assess the stability of risk models?

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Bootstrap resampling is used only for software testing, not data analysis

Bootstrap resampling involves generating multiple datasets by sampling with replacement, which allows for better estimation of model accuracy and stability

Bootstrap resampling is only applicable to small datasets, not large financial data

Bootstrap resampling is irrelevant and leads to overfitting in financial models