Errata and Updates for ASM Exam LTAM (First Edition Second Printing) Sorted by Page

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1 Errata for ASM Exam LTAM Study Manual (First Edition Second Printing) Sorted by Page Errata and Updates for ASM Exam LTAM (First Edition Second Printing) Sorted by Page Practice Exam 0:A7, 2:A7, and 2:A8 are defective in that none of the answer choices is correct. [9/4/208] On page xix, in the caption of the table, change MLC to LTAM. [8/8/208] On page 7, delete the (5.) on the tenth line. [0/4/208] On page 43, in the solution to exercise 8.5, on the second to last line, change to On the last line, change 88,08080 to and change to [0/6/208] On page 89, on the last line of the answer to Example 0H, change 3 p 70 to 3 p 77. [7/30/208] On page 95, in the solution to exercise 0.2, replace the solution, starting with the fourth line, with 0.5p (79.5, 2024) = 0.5q (79, 2024) 0.5q (79, 2024) = 0.5( ) 0.5( ) = The person turned 80 in 2025, so age 80 mortality is projected for 3 years. Half-year survivorship for (80) is q (80, 2025) = ( 0.0) 3 = p(80, 2025) = 0.5( ) = The probability that the person dies during calendar year 2025 is ( )( ) = [9/29/208] On page 98, in the solution to exercise 0.0, on the second line, replace both 0.2s with 0.07s. [8/2/208] On page 98, in the solution to exercise 0.3, on the last line, change to and change to [8/8/208] On page 25, 6 lines from the bottom, change 2 = to 2 = [7/23/208] On page 359, in the solution to exercise 7.3, on the second line, change 2 to /2. Note, however, that it is unnecessary to calculate i (2) ; the tables give i /i (2) =.0227, so you just have to multiply by.0227 to get the answer. [8/25/208] On page 524, in exercise 26.4(ii), change i = 0.06 to i = [8/25/208] On page 559, in the solution to exercise 27.27, change the last line to G = 6, = [7/27/208] On page 645, on the last line of the answer to Example 33E, change 98,576.4 to 00,000 and change to [8/3/208] On page 655, in the solution to exercise 33.3, on the fifth displayed line on the page, change the denominator 0.04/.04 to Change the last displayed line of the solution to e 000e 0.04(3) 0.04(32) = [8/3/208] On page 655, in the solution to exercise 33.4, on the first displayed line, delete ä 65:20 =. The line should read P = A 65:20 = ä 65: =

2 2 Errata for ASM Exam LTAM Study Manual (First Edition Second Printing) Sorted by Page [8/3/208] On page 7, replace the solution to exercise 37.3 with Let s calculate the gross premium. G (0.95ä ) = 000A E 65 A (676.22) G = = (3.5498) 0.95 Now we calculate the EPV of benefits and expenses at time A G ä 95 = 2(88.97) ( )(3.807) = The gross premium reserve is (3.807) = [9/4/208] On page 88, one line above Example 42C, change is is to it is. [8/3/208] On page 83, in the solution to exercise 42.5, on the third line, change to Make the same change in the denominator of the fourth line, and in the numerator, change to [9/4/208] On page 848, on the fourth line of the Disability income paragraph, change atate to state. [7/3/208] On page 89, on the last line of the page, change 22,560.4 to 2, [9/4/208] On pages 9-92, in the solution to Quiz 46-2, on the first line, change ā to 200ā65. Change the last line of the solution to 00( ) ( ) + 200(0.9770) = [9/20/208] On page 95, in expression (47.3), change ā x+t :n (x+t ) to ā :n t. [9/4/208] On page 98, in the answer to Example 47B, change the last 3 lines of the page to d t V () = δ 0 V () µ 0 x +0 ( 0V (0) 0 V () ) µ 2 x +0 ( 0V (2) 0 V () ) µ 3 x +0 ( 0V (3) 0 V () ) µ 4 x +0 ( 0V () ) = (0.05)(45,000) 0.06(20,000 45,000) 0.4(,000 45,000) 0.08(400,000 45,000) 0.02( 45,000) = 38,4 [9/4/208] On page 99, in the answer to Example 47C, change the third line to Once someone enters states 3 or 4, it is impossible to get to state 2, so Ā 32 x = Ā42 x = 0. Change the first two displayed lines to: dā 02 dā 02 t =0 Change the second two displayed lines to dā 24 = δā 02 µ0 (Ā2 Ā02 ) µ02 ( Ā02 ) (µ03 + µ04 )( Ā02 ) = 0.05Ā 02 x (Ā2 x +0 Ā02 x +0 ) 0.04( Ā02 x +0 ) = δā 24 µ2 (Ā4 Ā24 ) µ23 (Ā34 Ā24 ) µ24 (b (4) Ā 24 )

3 Errata for ASM Exam LTAM Study Manual (First Edition Second Printing) Sorted by Page 3 dā 24 t =0 = 0.05(Ā 24 x +0 Ā24 x +0 ) 0.0(Ā4 x +0 Ā24 x +0 ) 0.2(Ā34 x +0 Ā24 x +0 ) 0.0( Ā24 ) [9/7/208] On page 928, in exercise 47.5, in statement (ii), change i = 0.04 to δ = [9/7/208] On page 939, in the solution to exercise 47.4, on the last line, change t p 0 j x [8/9/208] On page 940, in the solution to exercise 47.6, change the last two lines to dā dā 5 to 0 p 0 j x. = δā B () t µ 0 0 (ā ā ) µ2 ( ā ) µ3 ( ā ) = 0.05(4.3298) 0.02( ) ( )( ) = [0/5/208] On page 945, in the solution to exercise 47.22, 3 lines from the end, change a :3 to ä :3. [9//208] On page 030, replace the solution to exercise 5.7 with p (τ) = 4,572.5/7,45.5 = Also, Using formula (5.2), q (w ) q (τ) = d (w ) d (τ) = , = p (w ) = p (τ) (w ) q / q (τ) Therefore, q (w ) = = = = [8/2/208] On page 260, in the solution to exercise 64.4, replace the displayed line with 20p 8 = F (38) F (8) = 4/7 2/7 = 0.6 [9/3/208] On page 268, on the second line of Example 65F, change both 44,00s to 49,000. [8/5/208] On page 354, on the fifth line of the answer to Example 69I, delete 0.9 from the sum. [8/5/208] On pager 355, 2 lines below the table in the answer to Example 69J, change r 3 and r 5 to e 3 and e 5. In the subsequent calculations on the next 5 lines, change each r i to e i, where i =, 2, 3, 4, 5. [0/4/208] On page 376, on the first displayed line, the expression between the two equal signs should be a fraction. Replace the line with 9 k=0 00,000(.04 k ) = 00,000(.0420 ).04 = 2,977,808 [9/3/208] On page 379, 2 lines below the first displayed line, change 0.7(9.3482)( ) to 0.7(3.0027)( ). [7/27/208] On page 400, on the third displayed line of the page, delete (25), (26), and (27), so that the line reads:

4 4 Errata for ASM Exam LTAM Study Manual (First Edition Second Printing) Sorted by Page ( )(0.6)(3.) 0.34(47,43.52) + ( )(0.8)(2.9) (0.4927)()(2.7) =, [7/29/208] On page 43, in the solution to exercise 7.2, on the first displayed line, place 00,000 before the fraction: /.03 Total pensionable earnings = 00,000(.03 k 2 ) = 00,000 = 995, k= 2 On the last line, a factor of.5 is missing. The line should read ,400.4(0.035)(.5) = 23, [7/30/208] On page 49, replace the first sentence of the answer to Example 72B with Out of 93,085.4 lives age 0, 27,925.6 retire immediately and an additional 6,87.6 retire during the first year, 5,573. retire at age 6, and 5,07.5 retire at age 62. [8/8/208] On page 425, in the solution to exercise 72.4, on the second line from the end, put an exponent 5 on the first : AVTHB = 4000( ) [0/4/208] On page 55, in question 6(a), change 267,000 to 333,000. [0/25/208] On page 626, in question 8(ii), replace Illustrative Life Table with Standard Ultimate Life Table. [0/6/208] On page 663, replace the solution to question 2 with the following (there is no change to the solution to part (a)): (a) 5 52,77.94 = 59, (59,563.86) = 27,65.09 (b) First we calculate the probability that (62) will survive to 63, 64, and 65. p 62 = l 63 l 62 = 95, , = p 62 = l 64 l 62 = 95, , = p 62 = l 65 l 62 = 94, , = The EPV of retiree health benefits at age 60 for those retiring at age 62 is ( ) ( ) + ( )(52,77.94) = 74, (74,349.35) = 35,537.22

5 Errata for ASM Exam LTAM Study Manual (First Edition Second Printing) Sorted by Page 5 (c) Using the results of the previous parts, we accrue /2 of the age 62 benefit and /5 of the age 65 benefit. 2 (0.45)(74,349.35) + (0.45)(59,563.86) =, (d) First, we ll remove the first three years of benefits from the expected present value at age 65. We must take into account Standard Ultimate Life Table mortality. 2 52, p p , ,398.0 = 52, = 30, , , That would be the expected present value of retiree health benefits for a person age 65 in 208 who retires in 202. We divide this by 3 p 65 = l 68 /l 65, remove three years of inflation, and accumulate interest for 3 years since we pay it 3 years earlier: 30, ,706.0/94, = 29, [0/7/208] On page 698, in the solution to question 8, replace the and fifth line with p (5, 207) = 0.009(0.98) = p (, 206) = (0.995)( ) = [0/8/208] On page 70, in the solution to question 4(a), two lines from the end, change final answer to In the solution to question 4(b), on the second line, replace with and replace with [0/8/208] On page 72, in the solution to question 5(a), on the second line, and should be interchanged so that the fraction is 000(5.2422) [0/25/208] On page 752, in the solution to question 7, replace 97,765. with 8,200.3 on lines 3 and 5, and replace the final answer 0,32 with 8,567. [0/25/208] On page 825, change the answer key for question 7 to (D). Make the same change to the answer key on page 762 [0/9/208] On page 772, in the solution to question 5(c), on the last line, change 9 answer to 0, to and change the final 29 [0/25/208] On page 776, in the solution to question 0, in the table, replace the entry for t V for t = with 0, since this reserve is ignored. Replace the entry for Pr t for t = with [0/25/208] On pages , replace the solution to question 7 with We can either calculate single premiums for insurances or annuities. Using insurances: A 55:0 = A 65:0 = l75 0E 55:65 = l 55 0 = 20 E 55 ( 0 ) = ( 0 ) =

6 6 Errata for ASM Exam LTAM Study Manual (First Edition Second Printing) Sorted by Page A 55:65:0 = A 55:65 0 E 55:65 A 65: E 55:65 = (0.5480) = A 55:65:0 = = Then the annual net premium is The answer is 000( ) = P 55:65:0 = d A 55:65:0 A 55:65:0 = (0.05/) [0/25/208] On page 79, replace the solution to question 8 with We must start with A 67:8 and work back recursively. = A 67:8 = A 65 :20 v q 65 v 2 p 65 q 66 2E ( )( ) = 2 (93,398./94,579.7)/ 2 = Doubling µ squares p 66, so the revised values are Now we do two recursions. p 66 = ( ) 2 = q 66 = = A 66:9 = v (p 66 A 67:8 + q 66 ) (0.9906) = :20 = v (p 65 A 66:9 + q 65 ) A 65 = (0.9965) = = A 65:20 = 000(0.9465) = (B)