Data Analytics in Accounting, Economics & Finance

Questions:

Q1:

  1. In KYC E1, we examined the relationship between age and life expectancy. Challenger has a perpetual annuity product that pays the policyholder an annual payment for as long as they are alive. How can age-based life expectancy help Challenger price this product?
  2. In KYC E2, we looked at how a Cumulative Distribution Function (CDF) can help us determine population proportions.

Challenger currently operates in Australia and is considering an expansion in the the US market. The company has determined that its target demographic encompasses individuals between the ages of 60 to 79.Use the demographic profiles provided to calculate the expected market sizes for each country and gender combination (express your answer in percentages).

Q2:

  1. In Macro Environment E1, we looked at Consumer Price Index (CPI) as a measure of inflation. In our analysis, we found that using smoothed CPI provided better results in estimating future interest rates. Discuss one advantage and one disadvantage in using smoothed CPI to forecast interest rates.
  2. In Know Your Product E1, we discussed inflation shielding as a product feature in annuities. What are the benefits of inflation indexation in fixed income products? Why is it important for retirees? What is the cost for having inflation indexation as a product feature?
 
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