Preview Questions Actuary | Role Specific Skill

Question 1: Which of the following is a key component of the Solvency II Directive for insurance companies?

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Investment diversification rules

Standards for corporate governance in insurance companies

Guidelines for customer data protection

Requirements for actuarial reserving and risk assessment

Question 2: Which regulatory framework primarily governs pension plan funding requirements in the United States?

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Solvency II

IFRS (International Financial Reporting Standards)

GAAP (Generally Accepted Accounting Principles)

ERISA (Employee Retirement Income Security Act)

Question 3: How do "Time Series Analysis" techniques help in predicting financial trends, and what are the limitations when applying them to the insurance industry?

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Time series analysis is irrelevant in the insurance industry, where only static data is used

Time series analysis identifies patterns in historical data and forecasts future trends, but limitations include non-stationary data and outlier impacts

Time series analysis works only for stock markets, not for insurance data

Time series analysis is only useful for short-term predictions, not long-term trends

Question 4: In a financial model for a property and casualty insurer, how do you assess the impact of large catastrophic events on the overall portfolio?

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Implementing a Monte Carlo simulation

Using the correlation of losses with market returns

Applying a deterministic stress test

Using the Extreme Value Theory (EVT)

Question 5: What is the key limitation of using VaR (Value at Risk) in assessing the risk of a portfolio?

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It only applies to equity portfolios

It does not account for extreme events outside the confidence level

It does not account for liquidity risk

It assumes normal distribution of asset returns

Question 6: Which of the following is the most appropriate method for modeling long-term tail risk in insurance portfolios?

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Monte Carlo Simulation

Linear Regression

Exponential Distribution

Extreme Value Theory