Basic:A1. Assume the premium you determined is charged. For each of the following assumptions, holding the others at their assumed value, determine the value at which the product is expected to lose money. a.Base year PMPM.b.Annual trend.c. Coinsurance percentage.d.PMPM value of deductible and annual limits.A2. Which assumption is most critical? Explain. Show your calculations.Part B For Attaboy Plus:B1. Assume the premiums you determined are charged. For each of issue ages 0, 5 and 10 and for each of the following assumptions, holding the others at their assumed value, determine the value at which the IRR drops to 5 percent. a.Mortality rate at each age multiplied by the same constant.b.Lapse rate.c.Acquisition expense.d.Maintenance expense.e.Rate of return on reserve and target surplus.B2. Is it appropriate to only vary these five assumptions one at a time, or should some be varied together? Explain why or why not. Do not do further numerical analyses. B3. Is it appropriate for any of these five assumptions to vary by policy year? Explain why orwhy not. Do not do further numerical analyses.B4. Which two assumptions are most critical? Explain.
