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Box 972-60200 – Meru-Kenya.  \nTel: 020-2069349, 061-2309217. 064-30320 Cell phone: +254 712524293, +254 789151411  \nFax: 064-30321  \n[Website:](Website: www.must.ac.ke)[ ](Website: www.must.ac.ke)[www.must.ac.ke](Website: www.must.ac.ke) Email: [info@mucst.ac.ke](info@mucst.ac.ke)  \nUniversity Examinations 2014/2015  \nFIRST YEAR SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR  \nOF ACTUARIAL SCIENCE  \nSTA 2190: INTRODUCTION TO ACTUARIAL SCIENCE  \nDATE: APRIL 2015 TIME: 2 HOURS  \nINSTRUCTIONS: Answer question one and any other two questions  \nQUESTION ONE (30 MARKS)  \na) You are naturing a skill in the field of Actuarial Science. What do you think actuarial science is? (2 Marks)  \nb) A woman who has won a price is offered a lump sum of shs.100,000 to invest now orshs.55,000 to invest at the end of this year and another shs.55,000 to invest at the end of the following year. If all investments are assumed to earn 7% compound interest, which investment should she choose to maximize returns if she intends to withdraw the money after 4 years? (5 Marks)  \nc) Actuarial science like any other discipline has had its fair share of problems and successes in its development. Give a brief history of actuarial science by explaining the predevelopment and formalization stages (10 Marks)  \nd) Calculate the length of time taken for shs.1,000 to accumulate to shs.1,500 at a sample rate of interest of 6% pa (3 Marks)  \ne) Actuarial Science as a discipline boosts of several areas of specialization. List and explain the five types of actuaries that are recognized by actuarial professional bodies (10 Marks)  \nMeru University of Science & Technology is ISO 2008:9001 Certified  \nFoundation of Innovations Page 1  \nQUESTION TWO (20 MARKS)  \na) Age Lx dx qx  \n0 100000 814  \n1 99186 2 99124  \n3 99086  \n4 99056 24  \ni) Fill in the blanks in the table above (5 Marks)  \nii) From the table above. Calculate:  \n(a) p 2 (2 Marks)  \n(b) 2 p3 (2 Marks)  \n(c) 1 q 4 (1 Mark)  \n(d) l5 (2 Marks)  \nb) Pension plans are broadly classified into two broad classes. Differentiate between the two classes (4 Marks)  \nc) Your mother is in the process of deciding to take a life insurance cover. In a bid to convince her to take one you decide to explain to her the advantages of having a life cover. Which advantages will you share with her (4 Marks)  \nQUESTION THREE (20 MARKS)  \na) The main objective of every insurance contract is to give financial security and protection to the insured from any future uncertainties. Explain five principles of insurance that guides the contractual relationship between the insurer and the insured (10 Marks)  \nb) The risk manager of Bidii Investments is selling a proposal of insuring all investments in shares to the directors ofthe company. The directors have refused to buy the proposal on grounds that investment in shares is not an insurance risk. Explain five characteristics of insurable risks they encountered in their evaluation (10 Marks)  \nMeru University of Science & Technology is ISO 2008:9001 Certified  \nFoundation of Innovations Page 2  \nQUESTION FOUR (20 MARKS)  \na) Financial management is very key to the success or failure of a company. Explain (6 Marks)  \nb) An investor puts shs.5000 in a savings account that pays 10% simple interest at the end of each year. Calculate how much the investor will have after 6 years if the money was:  \ni) Invested for 6 years (2 Marks)  \nii) Invested for 3 years and then immediately reinvested for a further 3 years (3 Marks)  \niii) Account for any difference in (i) and (ii) above and suggest a possible remedy to the problem (2 Marks)  \nc) Define the following terms as used in actuarial science:  \ni) Policy holder  \nii) Underwriting  \niii) Beneficiary  \niv) Risk management (4 Marks)  \nd) (i) Differentiate between term assurance and endowment assurance (2 Marks)  \n(ii) Which of the two covers above would advise a person suffering from terminal illness e.","cbCaiqQKHldRAPuh","https://ap.wps.com/l/cbCaiqQKHldRAPuh","pdf",91130,"English","# QUESTION ONE\n## QUESTION TWO\n# QUESTION THREE\n# QUESTION FOUR\n# QUESTION FIVE","[{\"question\":\"What investment choice should be made to maximize returns under compound interest, considering a withdrawal after 4 years?\",\"answer\":\"Choose the option that yields the higher future value at the 4-year horizon when both lump sums are compounded at 7% compound interest.\"},{\"question\":\"What are the predevelopment and formalization stages in the history of actuarial science?\",\"answer\":\"Explain how actuarial ideas emerged before becoming formally established, and then describe how the discipline moved toward formal methods and professional development.\"},{\"question\":\"How are term assurance and endowment assurance differentiated, and which is recommended for terminal illness?\",\"answer\":\"Differentiate the two cover types by their payout structure, and advise the cover appropriate for a person suffering from terminal illness such as cancer.\"}]","STA 2190 - INTRODUCTION TO ACTUARIAL SCIENCE - Examination Questions | PDF",1790489562]