CAS Exam 7 Practice Questions - CAS Exam 7 Policy Liabilities, Valuation & ERM Exam

Which of the following best describes the Mack chain ladder method as a stochastic reserving technique?

A fully parametric model that assumes incremental losses follow a log-normal distribution A distribution-free model that reproduces chain ladder reserves and supplies prediction error estimates A Bayesian credibility model that requires prior distributions for each accident year A bootstrap procedure that simulates pseudo-triangles by resampling unscaled residuals

Correct Answer:

A distribution-free model that reproduces chain ladder reserves and supplies prediction error estimates

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