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What Is Actuarial Risk Assessment? Provide Two Advantages and Two

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Essay

What is actuarial risk assessment? Provide two advantages and two disadvantages associated with this method.What new method of risk assessment was developed in an attempt to address certain limitations associated with the actuarial approach?


Definitions:

Ownership Interests

Pertains to rights or claims individuals or entities have in an asset, potentially entitling them to income generated by the asset and a share in the asset's liquidation proceeds.

Nominal Rate

The stated interest rate of a financial instrument, not accounting for inflation or compounding effects.

Effective Rate

The actual interest rate on a loan or investment, taking into account the effects of compounding and other factors.

Face Rate

The interest rate stated on the face of a bond or a loan document, which determines the interest payments that the issuer will make.

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