In reply, there are two conceptual applications that I have encountered
Taylor Series in actuarial science applications:
1. The convergence of a development or extrapolation parameter, such as
the estimated mean age-to-ultimate "loss" development factor.
2, The approximation of statistical parameters to a desired degree of
"significance", such as the first or second order approximation of the
variance of an analytical random variable form. An example of such a
form might be a simple form of x/y, where interest is in the random
variable z that is equal to this analytical random variable form, i.e.
z=x/y.
I hope this stimulates some discussion.
Christopher Diamantoukos, FCAS
Rob Coridan wrote:
> Hello, I'm sorry to bother you, but my name is Robert Coridan and
> I am a student in the Actuarial Science at the Ohio State University.
> We've been learning several techniques for approximation in my
> calculus class, and I was wondering....as actuaries, can you think of
> an example of an instance where you would ever use the Taylor Series?
> Any suggestions you can give me, no matter how brief, would be greatly
> appreciated. Thank you! -Robert
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