Which of the following best describes the concept of diversification benefit in economic capital modeling?
Question 2
In the context of solvency frameworks, what is the primary purpose of Pillar 2 under Solvency II?
Question 3
A stress test scenario for an insurer involves a sudden increase in mortality rates by $20\%$ for a portfolio of life insurance policies. If the current expected claims for this portfolio are $50$ million, and the increase in mortality directly translates to a proportional increase in claims, what is the approximate additional capital required due to this stress event?
Question 4
Which of the following best describes the primary advantage of using a bottom-up approach to risk aggregation in economic capital modeling?
Question 5
In the context of pension funds, what is the significance of the discount rate used in liability valuation for capital modeling?
