Chapter 33 - Valuation Of Liabilities Flashcards
1
Q
Valuation methods
A
Table 🙃
2
Q
Valuing options and guarantees
A
Not always appropriate to assume highest cost
Risk of anti selection
Stochastic approach
3
Q
Valuing options and guarantees
Take into consideration
A
State of the economy
Demographic factors
Cultural bias
Customer sophistication
4
Q
Sensitivity analysis
A
Extent of margins needed in assumptions
Extent of global provisions required
5
Q
Allowing for risk
Discounted cashflow valuation
A
Margin into each assumption
Overall contingency loading
Adjust discount rate
6
Q
Allowing for risk
Fair valuation
A
No need to adjust for financial risk
Non financial risk: adjust cashflows, extra provision
7
Q
Different methods of calculating provisions
A
Statistical analysis
Case by case estimate
Proportionate approach
