Transcription of Actuarial Mathematics and Life-Table Statistics
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Actuarial Mathematicsand Life-Table StatisticsEric V. SludMathematics DepartmentUniversity of Maryland, College Parkc 2006 Chapter 6 Commutation Functions,Reserves & Select MortalityIn this Chapter, we consider first the historically important topic ofCommu-tation Functionsfor Actuarial calculations, and indicate why they lose theircomputational usefulness as soon as the insurer entertains the possibility (asdemographers often do) that Life-Table survival probabilities display someslow secular trend with respect to year of birth.
The expected present value of $1 one year in the future if the policyholder aged x is alive at that time is denoted in older books as nEx and is called the actuarial present value of a life-contingent n-year future payment of 1: A 1 x:n⌉ = nEx = v n npx Even such a simple life-table and interest-related function would seem to re-
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