A Company That Sells Annuities Must Base the Annual Payout

question 155

Short Answer

A company that sells annuities must base the annual payout on the probability distribution of the length of life of the participants in the plan.Suppose the probability distribution of the lifetimes of the participants is approximately a normal distribution with a mean of 68 years and a standard deviation of 3.5 years.What proportion of the plan recipients die before they reach the standard retirement age of 65?

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Definitions:

Focused Work Centre

A permanent or semi-permanent product-oriented arrangement of machines and personnel.

Factory Within A Factory

A concept where a segment of a manufacturing facility operates semi-independently, focusing on a specific product or process line, often to increase efficiency or flexibility.

Slotting

An inventory management process where products are placed in the most appropriate storage area in a warehouse to optimize picking efficiency.

Ethical Issues

Considerations or dilemmas rooted in moral principles that arise in the context of professional practice or business operations.