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The Effect of a Decreasing Rate of Interest on Annuities and Policy Reserves

Published online by Cambridge University Press:  18 August 2016

Extract

In an Appendix to the Report of Messrs. A. Hendriks, A. H. Bailey, and R. P. Hardy, to the Australian Mutual Provident Society, reprinted in our columns in July 1894 (J.I.A., xxi, 325), Mr. R. P. Hardy elaborated an ingenious method of valuation giving effect to a decreasing rate of interest, assumed to be subject to a constant annual reduction throughout a given period. Tables were added showing the values of annuities and assurances under the conditions mentioned, the rate of interest commencing at £3. 15s., and decreasing one shilling per-cent per annum until the end of the fifteenth year, after which it was assumed to remain constant at £3 per-cent per annum. A novel problem was investigated with great success in this Appendix; and, both on account of the originality with which the subject was treated, and the utility of the results, the contribution will always possess great interest for students of life assurance science.

Type
Research Article
Copyright
Copyright © Institute and Faculty of Actuaries 1896

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