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A Reading of the Theory of Life Contingency Models: A ...

A Reading of the Theory of Life Contingency Models: A Preparation for Exam MLC/3L. Marcel B. Finan Arkansas Tech University c All Rights Reserved Preliminary Draft 2. To My Daughter Nadia Contents Preface 11. Prerequisite Material 13. Brief Review of Interest Theory 15. 1 The Basics of Interest Theory .. 15. 2 Equations of Value and Time Diagrams .. 26. 3 Level Annuities .. 28. Level Annuity-Immediate .. 28. Level Annuity-Due .. 30. Level Continuous Annuity .. 32. 4 Varying Annuities .. 34. Varying Annuity-Immediate .. 34. Varying Annuity-Due .. 38. Continuous Varying Annuities .. 42. Continuously Payable Varying Annuities .. 45. 5 Annuity Values on Any Date: Deferred Annuity .. 46. A Brief Review of Probability Theory 51. 6 Basic Definitions of Probability .. 51. 7 Classification of Random Variables .. 57. 8 Discrete Random Variables .. 59. 9 Continuous Random Variables .. 69.

occurrence of some event, such as the death of the insured, an auto accident by an insured, and so on. The insured makes premium payments to the insurance company contingent upon being alive, having su cient funds, and so on. Two important ingredients in the …

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