With regard to example 10.2 (b). I am not sure why we are dividing by s bar and why we approximate it by s_(54.5)

Login

0 votes

Part (b) of the question states that the $100 000 given is the "rate" of salary at age 55, as opposed to part (a) which states that the $75 000 was the salary received over the year leading up to age 35. This is you should use s bar which is the symbol for the salary rate.

If you consider the relationship between the definitions of the salary rate and the salary scale on a previous page in the textbook, you will see that the approximation of s bar using s is intuitive.

- All categories
- BUS 1003H - Introduction to Financial Risk (43)
- BUS 2016H - Financial Mathematics (53)
- BUS 3018F - Models (69)
- BUS 3024S - Contingencies (61)
- BUS 4028F - Financial Economics (20)
- BUS 4027W - Actuarial Risk Management (46)
- BUS 4029H - Research Project (5)
- Mphil (1)
- Calculus and Pure Mathematics (3)
- Statistics (16)

...