Neas-Seminars

## MS Mod 18 Units of measurement practice exam questions

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 By NEAS - 8/6/2018 4:34:47 PM MS Module 18 Units of measurement practice exam questions(The attached PDF file has better formatting.)An actuary in the United States uses least squares regression with N pairs of observations (Xi, Yi) to estimate average annual claims cost in dollars per average distance driven per day in miles, giving annual claim costs (Y) in dollars = β0 + β1 × distance driven (X) in miles + ε, with β0 = 70 and β1 = 13.1 A European actuary changes the parameters to annual claims costs in Euros and distance driven per day in kilometers. Assume one Euro = 1.66 dollars and 1 kilometer = 0.625 miles.Question 18.1: β0What is β0 in the European actuary’s regression equation? Answer 18.1: 70 / 1.66 = 42.17(\$70 = €42.17)Question 18.2: β1What is β1 in the European actuary’s regression equation? Answer 18.2: 13.1 × 0.625 / 1.66 = 4.93(13.1 (dollars/mile) × (0.625 miles per kilometer) / (1.66 dollars per Euro) = 4.93 (Euros/kilometer) )