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ACST255 – Contingent Payments 1

2017 – S2 Day

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff Lecturer
Chong It Tan
Contact via Contact via email or iLearn Forum
E4A 609
Thursday 3-4pm during teaching weeks or by appointment
Credit points Credit points
3
Prerequisites Prerequisites
Admission to BActStud and ACST152 and ACST202 and STAT272 and GPA of 2.5 (out of 4.0)
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description
This unit covers the analysis of cash flows dependent on uncertain events due to mortality and other factors. It introduces the concept of the expected present value of payments under various life insurance contracts, including whole life, term and endowment assurances; immediate and temporary annuities; and deferred assurances and annuities. The standard international actuarial notation in life insurance is used extensively. Probability models and life tables are used to calculate the expected present values accurately based on ultimate or select mortality. Furthermore, important concepts of pricing and reserving for future contingent liabilities are discussed. Equations of value are established to calculate net premiums. Prospective and retrospective net premium reserves required to meet future liabilities are determined and compared. The concepts and methods are then extended to gross premiums and reserves that make allowance for profits and expenses. Students gaining a grade of credit or higher in both ACST255 and ACST355 are eligible for exemption from subject CT5 of the professional exams of the Institute of Actuaries of Australia.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at http://students.mq.edu.au/student_admin/enrolmentguide/academicdates/

Learning Outcomes

  1. Understand simple survival models, select and ultimate mortality rates and their applications.
  2. Be able to calculate expected present values and variances of benefits for simple life insurance contracts.
  3. Be able to calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  4. Be able to analyse the profit arising from life insurance contracts in simple scenarios.
  5. Demonstrate the ability to identify key unit concepts and to integrate them to solve and analyse novel problems.

General Assessment Information

For all assessments:

  • Assessment criteria for all assessment tasks will be provided on the unit iLearn site.

  • All individual assessment results will be made available under Grades on the website. 

  • It is the responsibility of students to view their marks for each within-session assessment on iLearn within 20 working days of posting. If there are any discrepancies, students must contact the unit convenor immediately. Failure to do so will mean that queries received after the release of final results regarding assessment marks (not including the final exam mark) will not be addressed.

  • In the cases where a disruption to studies application is approved, the student may be offered an alternative assessment or may receive a mark based on the percentage mark achieved by the student in one or more other assessment tasks, at the unit convenor’s discretion.

Assessment Tasks

Name Weighting Due
Class Test 1 10% 23 August
Class Test 2 30% 26 October
Final Examination 60% Exam period

Class Test 1

Due: 23 August
Weighting: 10%

The class test 1 will be a 45-minute written paper with no reading time, held during the lecture time. It will cover Sections 1 to 3. 

Please use the class test as an indicator of whether you are progressing satisfactorily in the unit. If you are having difficulties, please see the Unit Convenor and consider withdrawing before the census date on Friday of week 4.

Students who have not sat the test will be awarded a mark of 0 for the task, except for cases in which an application for disruptions to studies is made and approved. 

 


This Assessment Task relates to the following Learning Outcomes:
  • Understand simple survival models, select and ultimate mortality rates and their applications.
  • Be able to calculate expected present values and variances of benefits for simple life insurance contracts.
  • Demonstrate the ability to identify key unit concepts and to integrate them to solve and analyse novel problems.

Class Test 2

Due: 26 October
Weighting: 30%

The class test 2 will be a two-hour written paper with no reading time, held during the lecture time. It will cover Sections 4 to 9. 

Students who have not sat the test will be awarded a mark of 0 for the task, except for cases in which an application for disruptions to studies is made and approved. 


This Assessment Task relates to the following Learning Outcomes:
  • Be able to calculate expected present values and variances of benefits for simple life insurance contracts.
  • Be able to calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Demonstrate the ability to identify key unit concepts and to integrate them to solve and analyse novel problems.

Final Examination

Due: Exam period
Weighting: 60%

The final examination will be a three-hour written paper with ten minutes reading time, held during the University Examination period.

You are permitted ONE A4 page of paper containing reference material printed on both sides. The material may be handwritten or typed. The page will not be returned to you at the end of the final examination.


This Assessment Task relates to the following Learning Outcomes:
  • Understand simple survival models, select and ultimate mortality rates and their applications.
  • Be able to calculate expected present values and variances of benefits for simple life insurance contracts.
  • Be able to calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Be able to analyse the profit arising from life insurance contracts in simple scenarios.
  • Demonstrate the ability to identify key unit concepts and to integrate them to solve and analyse novel problems.

Delivery and Resources

Classes

The timetables for classes can be found on the University website at: https://timetables.mq.edu.au/2017/. Tutorials commence in week 2 of the session. 

Required and Recommended Texts and/or Materials

No textbooks are prescribed for this unit. Detailed notes, exercises and solutions are available on the unit's web site. 

Technology Used and Required

You will be required to use the iLearn site. You may find it useful to be able to construct spreadsheets to verify your solutions to tutorial exercises.  

Unit Webpage

Course material is available on the iLearn. To access the teaching website, go to http://ilearn.mq.edu.au and login using your usual login and password.

Unit Schedule

Since students often seem to print the schedule of topics, it is provided as a separate printer-friendly document in the administration section of this unit's iLearn web site.

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central. Students should be aware of the following policies in particular with regard to Learning and Teaching:

Academic Honesty Policy http://mq.edu.au/policy/docs/academic_honesty/policy.html

Assessment Policy http://mq.edu.au/policy/docs/assessment/policy_2016.html

Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html

Complaint Management Procedure for Students and Members of the Public http://www.mq.edu.au/policy/docs/complaint_management/procedure.html​

Disruption to Studies Policy http://www.mq.edu.au/policy/docs/disruption_studies/policy.html The Disruption to Studies Policy is effective from March 3 2014 and replaces the Special Consideration Policy.

In addition, a number of other policies can be found in the Learning and Teaching Category of Policy Central.

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/support/student_conduct/

Results

Results shown in iLearn, or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au.

 

Supplementary exams

Information regarding supplementary exams, including dates, is available at: 

http://www.businessandeconomics.mq.edu.au/current_students/undergraduate/how_do_i/disruption_to_studies

Student Support

Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

Learning Skills

Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.

Student Enquiry Service

For all student enquiries, visit Student Connect at ask.mq.edu.au

Equity Support

Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.

IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/

When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.

Graduate Capabilities

Problem Solving and Research Capability

Our graduates should be capable of researching; of analysing, and interpreting and assessing data and information in various forms; of drawing connections across fields of knowledge; and they should be able to relate their knowledge to complex situations at work or in the world, in order to diagnose and solve problems. We want them to have the confidence to take the initiative in doing so, within an awareness of their own limitations.

This graduate capability is supported by:

Learning outcomes

  • Understand simple survival models, select and ultimate mortality rates and their applications.
  • Be able to calculate expected present values and variances of benefits for simple life insurance contracts.
  • Be able to calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Be able to analyse the profit arising from life insurance contracts in simple scenarios.
  • Demonstrate the ability to identify key unit concepts and to integrate them to solve and analyse novel problems.

Assessment tasks

  • Class Test 1
  • Class Test 2
  • Final Examination

Discipline Specific Knowledge and Skills

Our graduates will take with them the intellectual development, depth and breadth of knowledge, scholarly understanding, and specific subject content in their chosen fields to make them competent and confident in their subject or profession. They will be able to demonstrate, where relevant, professional technical competence and meet professional standards. They will be able to articulate the structure of knowledge of their discipline, be able to adapt discipline-specific knowledge to novel situations, and be able to contribute from their discipline to inter-disciplinary solutions to problems.

This graduate capability is supported by:

Learning outcomes

  • Understand simple survival models, select and ultimate mortality rates and their applications.
  • Be able to calculate expected present values and variances of benefits for simple life insurance contracts.
  • Be able to calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Be able to analyse the profit arising from life insurance contracts in simple scenarios.
  • Demonstrate the ability to identify key unit concepts and to integrate them to solve and analyse novel problems.

Assessment tasks

  • Class Test 1
  • Class Test 2
  • Final Examination

Critical, Analytical and Integrative Thinking

We want our graduates to be capable of reasoning, questioning and analysing, and to integrate and synthesise learning and knowledge from a range of sources and environments; to be able to critique constraints, assumptions and limitations; to be able to think independently and systemically in relation to scholarly activity, in the workplace, and in the world. We want them to have a level of scientific and information technology literacy.

This graduate capability is supported by:

Learning outcomes

  • Understand simple survival models, select and ultimate mortality rates and their applications.
  • Be able to calculate expected present values and variances of benefits for simple life insurance contracts.
  • Be able to calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Be able to analyse the profit arising from life insurance contracts in simple scenarios.
  • Demonstrate the ability to identify key unit concepts and to integrate them to solve and analyse novel problems.

Assessment tasks

  • Class Test 1
  • Class Test 2
  • Final Examination

Changes from Previous Offering

The assessment scheme has been adjusted to comply with the new University Assessment Policy, which first applies for Session 2, 2016.

Research and Practice, Global and Sustainability

Survival analysis and the valuation of contingent payments has a long history. The techniques we are using can be found in textbooks on mathematics of finance, rather than needing to source recent research papers.

While some topics in this unit will use Australian jargon and mention Australian market features, the mathematical concepts in this unit are independent of any legislative constraints and so do not recognise national or planetary boundaries.