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Actuaries perform the crucial task of estimating the time paths and probability distributions of costs and revenues for different insurance contracts. Becoming an actuary takes several years, and involves passing a series of rigorous examinations given either by the Society of Actuaries or by the Casualty Actuarial Society. Usually, the individual works for an insurance company while studying for the exams, and the company gives the individual time off to study for the exams. Passing an exam usually results in a significant pay increase.
QUESTIONS
a) Do actuaries have general or firm-specific human capital?
b) Who "pays for" the worker's time off to study for the exams? Choose one answer and explain.
· the worker does, by accepting a lower salary
· the firm does, to invest in the worker's human capital
c) Why does the individual get a pay increase after passing each exam? Why not evaluate the employee once per year, like many companies do?
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