CT5: Frequently Asked Questions Page 1

Subject CT5
Frequently Asked Questions

Comment

This document contains useful questions asked by students studying Subject CT5, with
answers written by ActEds tutors. Each year, well incorporate these questions and
answers into the study material.

You may also find it useful to refer to the Subject CT5 Corrections page on the ActEd
website, which contains details of any typographical errors and ambiguities in the
Subject CT5 study materials for the 2008 exams that have been brought to our attention.

If you have any small queries about any aspect of the Subject CT5 course, please email
your question to CT5@bpp.com.

General questions

Question

Which recent old era subject questions are relevant to Subject CT5?

Answer

April 2000 exams: Subject 104, Q3-5, 7, 9

Subject 105, Q1, 3, 5-8, 11-14

September 2000 exams: Subject 104, Q1-4, 7, 13

Subject 105, Q1-3, 5, 6, 9, 10, 13, 14(i)

April 2001 exams: Subject 104, Q2, 3, 5, 8, 9(i)

Subject 105, Q2, 4, 7, 9, 11, 13-14

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Page 2 CT5: Frequently Asked Questions

September 2001 exams Subject 104, Q3, 4, 7

Subject 105, Q4-7, 9-11, 13(i)

April 2002 exams: Subject 104, Q5, 9, 10

Subject 105, Q1, 2, 6, 7, 10, 12-14

September 2002 exams: Subject 104, Q1, 2, 5, 11

Subject 105, Q3, 5-11, 13

April 2003 exams: Subject 104, Q2, 9, 11, 13

Subject 105, Q2, 3, 5, 7, 9, 10, 13, 14

September 2003 exams: Subject 104, Q8-10

Subject 105, Q1, 2, 5-7, 9, 11(i), 12, 13, 14

April 2004 exams: Subject 104, Q1, 4, 6

Subject 105, Q1, 2, 5, 7-10, 13, 14

September 2004 exams: Subject 104, Q1, 2, 4, 5, 8, 11

Subject 105, Q1, 2, 4-7, 9, 11-13

Questions on the Course Notes

Question

Where can I find annuity functions calculated using ELT15 (Males) mortality?

Answer

These are on Page 136 (at 4% interest) and Page 140 (at 6% interest).

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CT5: Frequently Asked Questions Page 3

Question

When we have a constant increase to the force of mortality, why do we always calculate
assurance functions using a premium conversion formula?

Answer

Lets use * to denote special mortality functions where there is a cons tant addition to
the standard force of interest, ie:

*x +t = x +t +

Then:

n
vn px* = e n exp ( x +t + ) dt
n 0

=e (
+ )n
exp x +t dt
n
0

= ( v *)
n
n px

where v* = e ( + ) . So whenever we have a term of the form v n n p x , a constant

increase to the force of mortality can be treated as a constant increase to the force of
interest and mortality is then treated as standard. Annuity functions are simply sums or
integrals of terms of the form v n n p x , so these can be calculated in the manner just
described.

Now consider the assurance function A*x :

A*x = v k+1 k px qx + k =
* *
v k +1 k p*x (1 p*x+k )
k =0 k =0

The presence of the q*x +k term means that we cannot treat the constant addition to the
force of mortality as an addition to the force of interest. The easiest way to calculate
A*x is to write it as:

A*x = 1 d a&&*x

Note that the d term is calculated using the standard rate of interest.

The Actuarial Education Company IFE: 2008 Examinations