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Assignment 4 Solution PDF

1) The document describes an assignment for an actuarial theory course. It includes 5 multi-part problems calculating values from a life table and using probabilities. 2) Problem 4 calculates the 1.5-year complete expected college lifetime for a student entering their second year using given yearly dropout probabilities. 3) Problem 5 calculates the expected number of survivors at age 97.5 for a group of 1000 people aged 95, initially using a uniform distribution of deaths assumption and then changing to a constant force of mortality assumption.

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336 views

Assignment 4 Solution PDF

1) The document describes an assignment for an actuarial theory course. It includes 5 multi-part problems calculating values from a life table and using probabilities. 2) Problem 4 calculates the 1.5-year complete expected college lifetime for a student entering their second year using given yearly dropout probabilities. 3) Problem 5 calculates the expected number of survivors at age 97.5 for a group of 1000 people aged 95, initially using a uniform distribution of deaths assumption and then changing to a constant force of mortality assumption.

Uploaded by

conan1233
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Math 471 - Actuarial Theory I Section G1

Assignment 4
Assignment 4 is due on Wednesday, September 23, 3:00pm.
1. (2 marks) You are given the following life table, where missing values are indicated by :
x
0
1
2
3
4
5

lx
1000.0
875
750
562.5
382.5
200.0

dx
125
125.0
187.5
180
182.5

px
0.875
0.857
0.75
0.680
0.523

Calculate 2| q0 .
Solution:
Based on the information given in the life table, we can fill out the missing numbers as shown
in red. Therefore,
l2 l3
= 0.1875.
2| q0 =
l0
2. (2 marks) You are given:
(i) lx = 1000( x) for 0 x
(ii) 30 = 0.0125
Calculate
e40:20 .
Solution:
t px

and

lx+t
xt
=
,
lx
x

d
1
t p0
t = dt
=
.
t
t p0

Hence, given 30 = 0.0125, we have = 110.


The 20-year term complete life expectation for (40) is
Z

e40:20 =

20

Z
t p40 dt

20

70 t
dt = 17.1429.
70

3. (6 marks) Exercise 3.2.


(a)
0.2 q52.4

=1

0.2 p52.4

=1

since q52 = (l52 l53 )/l52 .


1

0.6 p52
0.4 p52

=1

1 0.6q52
= 0.00192,
1 0.4q52

(b)
0.2 q52.4

=1

= 1 (p52 )0.2 = 0.00192,

0.2 p52.4

since p52 = l53 /l52 .


(c)
5.7 p52.4

5.7 p52.4

l58.1
0.9l58 + 0.1l59
=
= 0.9354.
l52.4
0.6l52 + 0.4l53

(d)
6.1 p52

6 p52 (p58 )
(p52 )0.4

0.4 p52

0.1

= 0.9354,

where 6 p52 = l58 /l52 .


(e)
3.2|2.5 q52.4

l55.6 l58.1
(0.4l55 + 0.6l56 ) (0.9l58 + 0.1l59 )
=
= 0.030957.
l52.4
0.6l52 + 0.4l53

(f)
3.2|2.5 q52.4

3.2 p52.4 5.7 p52.4

3.6 p52

0.4 p52

6.1 p52
0.4 p52

3 p52 (p55 )
(p52 )0.4

0.6

0.1
6 p52 (p58 )
(p52 )0.4

= 0.030950.

4. (2 marks) For a 4-year college, you are given the following probabilities for dropout from all
causes:
q0 = 0.15,
q1 = 0.10,
q2 = 0.05,
q3 = 0.01.
Dropouts are uniformly distributed over each year. Compute the temporary 1.5-year complete expected college lifetime of a student entering the second year,
e1:1.5 .
Solution:

e1:1.5 =

1.5

t p1 dt =
0

0.5

p1 t p2 dt

0
1

Z
(1 0.1t)dt +

t p1 dt
1

(1 tq1 )dt +

1.5

t p1 dt +

0.5

0.9(1 0.05t)dt = 1.3944.


0

5. (3 marks) An actuary is modeling the mortality of a group of 1000 people, each age 95, for
the next three years. The actuary starts by calculating the expected number of survivors at
each integral age by
l95+k = 1000 k p95 ,
k = 1, 2, 3.
The actuary subsequently calculates the expected number of survivors at the middle of each
year using the assumption that deaths are uniformly distributed over each year of age.
This is the result of the actuarys model:

Age
95
95.5
96
96.5
97
97.5
98

Survivors
1000
800
600
480

288

The actuary decides to change his assumption for mortality at fractional ages to the constant
force assumption. He retains his original assumption for each k p95 .
Calculate the revised expected number of survivors at age 97.5.
Solution:
Under the UDD assumption, we have
lx+0.5 = 0.5lx + 0.5lx+1 ,
which gives l97 = 360 and l98 = 216.
Therefore, under the constant force of morality assumption,
l97.5 = l97

0.5 p97

= l97 (p97 )

0.5


= l97

l98
l97

0.5
= 278.8548.

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