1. Butsic Interest p.79-81 Questions 9 and 12. (Question 18 on the 1995 exam and
Question 3 on the 1997 exam); If the risk adjustment equals e(R-i) then how is the risk
adjustment independent of the risk free rate, i?
2. Philbrick p.92 and 93; How can the reserve for discount increase on the balance sheet
when the estimated outstanding reserves are increased but decrease on the stmt of income?
3. Myers and Cohn p.107 Question #7 and #8 (Question 47 on the 1995 exam and Question
26b on the 1997 exam); Why is the tax on the underwriting profit assumed to be paid half
at the end of the first year and half at the end of the second year in Question 7 but all
paid at the end of the first year in Question 8?
4. Stone p.311-314 Questions A12 and A19 (Question 45a on 1989 exam and Question 11 on
the 1996 exam); Why does Question 12 not square the exposures (100) but in question 19
the x is squared?
5. Stone Question A13 p.313; Why does the expected loss per exposure need to be divided
by the ELR?
6. FASB, p.347 Question 1 (Question 7 on the 1994 exam) Should the answer not be E (1,3)
since transactions need to have both timing and underwriting risks?
Thanks!
Cara and Andrea