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Sample Actuarial Problems

Apply your math skills to actuarial exam questions.

Actuaries earn professional credentials by passing a series of examinations. This online exam is designed to give you an idea of the types of questions you might encounter on the preliminary actuarial examinations administered by the Casualty Actuarial Society and Society of Actuaries. The sample problems are actual questions from prior exams, but they do not cover all the topics or all levels of difficulty.

Answer the five multiple choice questions below, then click submit to see your results.

1

A survey of a group's viewing habits over the last year revealed the following information:

  1. 28% watched gymnastics
  2. 29% watched baseball
  3. 19% watched soccer
  4. 14% watched gymnastics and baseball
  5. 12% watched baseball and soccer
  6. 10% watched gymnastics and soccer
  7. 8% watched all three sports.

Calculate the percentage of the group that watched none of the three sports during the last year.

2

An insurance company estimates that 40% of policyholders who have only an auto policy will renew next year and 60% of policyholders who have only a homeowners policy will renew next year. The company estimates that 80% of policyholders who have both an auto and a homeowners policy will renew at least one of those policies next year.

Company records show that 65% of policyholders have an auto policy, 50% of policyholders have a homeowners policy, and 15% of policyholders have both an auto and a homeowners policy.

Using the company's estimates, calculate the percentage of policyholders that will renew at least one policy next year.

3

A tour operator has a bus that can accommodate 20 tourists. The operator knows that tourists may not show up, so he sells 21 tickets. The probability that an individual tourist will not show up is 0.02, independent of all other tourists. Each ticket costs 50, and is non-refundable if a tourist fails to show up. If a tourist shows up and a seat is not available, the tour operator has to pay 100 (ticket cost + 50 penalty) to the tourist. What is the expected revenue of the tour operator?

4

An auto insurance company insures an automobile worth 15,000 for one year under a policy with a 1,000 deductible. During the policy year there is a 0.04 chance of partial damage to the car and a 0.02 chance of a total loss of the car. If there is partial damage to the car, the amount X of damage (in thousands) follows a distribution with density function

What is the expected claim payment?

5

The stock prices of two companies at the end of any given year are modeled with random variables X and Y that follow a distribution with joint density function

What is the conditional variance of Y given that X = x ?