2006-12-03 07:04:33 · 2 answers · asked by Theodore N 1 in Science & Mathematics ➔ Mathematics
actuarial probability is probably going to be defined as survival probability or probability derived from actuarial functions such as mortality, life expectancy...
2006-12-03 07:54:27 · answer #1 · answered by Modus Operandi 6 · 0⤊ 0⤋
actuarial probability can be applied to many things: survival status for life insurance, annuities, and other investment opportunities. It can also be applied to statistical data to determine rates for car insurnace and other property/casualty divisions or small business units.
actuarial probability is more relevant in calculating cash flows where the cash flow may not occur. in finance it is usefull to find the present value of a series of cash flows, however, actuarially speaking these cash flows may not occur...this will change the present value of those cash flows.
For example, if a company was paying out an annuity to a retired person for a certain amount each year. the pv of those cash flows will be the value of the payments over the interest rate. actuarial speaking though, that retiree will not live forever, so the pv of those payments will be less....not a great example but it works..
hope that helps....
2006-12-04 04:59:55 · answer #2 · answered by Mike 2 · 0⤊ 0⤋