### Question DescriptionThe following table provides information on the overall rate changes for the calendar years 2018, 2019, and 2020.#### Table: Overall Average Rate Change| Overall Average Rate Change | Effective Date | Rate Level Group ||-----------------------------|----------------------|------------------|| – | Initial | 1 || 7% | July 1st, 2018 | 2 || 2% | January 1st, 2019 | 3 || 5% | April 1st, 2020 | 4 |### Tasks1. **Show the graph of the policies according to the Calendar year method** - Plot a graph showing the change in policies over time as per the data provided.2. **Calculate areas effective in Calendar year 2019** - Determine the effective areas for the rate levels applicable in the calendar year 2019.3. **Calculate the cumulative rate level index for each year** - Compute the cumulative effect of the rate changes for each calendar year.4. **Calculate the average rate level index for 2019, which is the weighted average of the cumulative rate level indices calculated in part 3** - Determine the average rate index for 2019 by averaging the cumulative indices with appropriate weights.5. **Calculate the on-level factor for the historical period** - Compute the adjustment factor to make past premiums comparable to current levels by applying the calculated cumulative rate changes.### Graph Description- The graph should illustrate the rate changes starting from the initial state, through changes applied on July 1st, 2018, January 1st, 2019, and April 1st, 2020. It should display a timeline on the x-axis and the rate change percentages on the y-axis, clearly indicating the effective dates of each change.

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The following table represents the overall change for calendar years 2018, 2019 and 2020 Overall Average Effective Date Rate Change Initial 7% July 1st 2018 2% January 1st 2019 5% April 1st 2020 Rate Level Group 2 3 1. Show the graph of the policies according to Calendar year method 2. Calculate areas effective in Calendar year 2019 3. Calculate the cumulative rate level index for each year 4. Calculate the average rate level index for 2019 which is the weighted average of the cumulative rate level indices calculated in part 3 5. Calculate the on-level factor for historical period.

The following table represents the overall change for calendar years 2018, 2019 and 2020 Overall Average Effective Date Rate Change Initial 7% July 1st 2018 2% January 1st 2019 5% April 1st 2020 Rate Level Group 2 3 1. Show the graph of the policies according to Calendar year method 2. Calculate areas effective in Calendar year 2019 3. Calculate the cumulative rate level index for each year 4. Calculate the average rate level index for 2019 which is the weighted average of the cumulative rate level indices calculated in part 3 5. Calculate the on-level factor for historical period.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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