Preview Questions Actuary | Role Specific Skill

Question 1: In survival analysis, what does the hazard function represent?

Which action should you take?

Choose only one option

The average time until an event occurs

The baseline risk of an event occurring regardless of time

The cumulative probability of an event occurring up to a specific time

The probability of an event occurring at a specific time, given survival until that time

Question 2: In the context of risk management, what does Value at Risk (VaR) measure?

Which action should you take?

Choose only one option

The risk of default on a bond in a financial portfolio.

The potential loss in the value of an asset or portfolio over a specified period for a given confidence interval.

The average expected return of a portfolio over a specified period.

The volatility of an asset's price movement over time.

Question 3: Which regression technique is most suitable for modeling the relationship between multiple predictor variables and a continuous response variable in actuarial modeling?

Which action should you take?

Choose only one option

Ridge Regression

Principal Component Regression

Poisson Regression

Logistic Regression

Question 4: If the data shows a kurtosis value significantly greater than 3, what does this indicate?

Which action should you take?

Choose only one option

The data has heavy tails and a higher probability of extreme outcomes

The data is evenly spread around the mean

The data is normally distributed

The data has a uniform distribution

Question 5: How do bootstrapping techniques improve the accuracy of financial forecasting models?

Which action should you take?

Choose only one option

By assuming normality in financial returns

By smoothing historical data to remove outliers

By resampling the data to create a more robust distribution

By adjusting for seasonal trends in the data

Question 6: What is the role of "Scenario Analysis" in stress testing financial models for insurance portfolios, and how do you ensure that the scenarios are realistic and comprehensive?

Which action should you take?

Choose only one option

Scenario analysis is only necessary after a financial crisis

Scenario analysis is irrelevant in financial modeling as all events are random

Scenario analysis helps assess the impact of extreme events on portfolios, with careful design of plausible but severe scenarios for comprehensive stress testing

Scenario analysis should focus solely on historical data, ignoring potential future changes