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Notes on the Effect of Changes in Rates of Interest on the Bonus-Earning Power of an Office Paying a Uniform Compound Reversionary Bonus

Published online by Cambridge University Press:  07 November 2014

John Leslie Anderson
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Synopsis

The Paper discusses the general problem of appreciation and depreciation, with special reference to the relation between maturing assets and maturing liabilities, and describes a method of calculating the bonus-earning power of different classes of policy. This method is used to test the effect on bonus-earning power of two types of changes in interest rates:–

  1. (a) a change, such as that caused by the War Loan conversion of 1932, which takes effect gradually; and

  2. (b) a subsequent change, due to a rise in the rate of income tax, which has an immediate effect on the income from existing as well as investments.

Type
Research Article
Information
Transactions of the Faculty of Actuaries , Volume 17 , 1945 , pp. 137 - 173
Copyright
Copyright © Institute and Faculty of Actuaries 1945

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