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Using a pricing or valuation basis

0 votes
asked Sep 1, 2017 in BUS 3024S - Contingencies by anonymous
edited Sep 7, 2017 by Njabulo.Dube

When doing premium/policy value calculations, do we assume (unless otherwise stated) that the interest form for the present valuing of the benefit is the same as that of the premiums?

For example in this question it states that the premiums are payable continuously but does not give any indication as to whether we should use Ax or A(bar)x

commented Sep 7, 2017 by Njabulo.Dube (2,410 points)

The question does state that the death benefit is payable immediately on death.

1 Answer

0 votes
answered Sep 5, 2017 by Yaseen (650 points)

As stated before on this site, the tutors do not necessarily have the textbook. Please try to ask your questions in a way that provides us with enough information to actually answer it. 

Usually the "interest form" assumption will be stated in the question. You could always try the two assumptions and check which one gets you the correct answer. This way you will know for future reference.