msr reasoning

7/31/2019 MSR Reasoning

1/5


2/5

A. 500 B. 1000 C. 1800 D. 1200 E. 367

2. The PBT from catering services in any month will be less than that from the Chinese

Restaurant Business (True/False)

The profit after tax, from Indian Vegetarian Restaurant business in any month will be les

than that from the Chinese restaurant business (True/False)

Actual annual profit before tax as a percentage of the estimated revenue is the highest fo

catering services (True/False)

3. Costs can be classified into two types fixed costs and variable costs. While fixed costs do

not change with revenue, variable costs are directly proportional to the revenue. For each o

the three options, the 'Annual Cost' mentioned in the table comprises an equal proportion of

fixed costs and variable costs. What will be the percentage increase in estimated profit after

tax from Indian Vegetarian Restaurant business, if estimate of the fixed costs is reduced by

8% ?

A. 8% B. 18% C. 25% D. 10% E. 36%

4. Return on Investment (ROI) is annual profit after tax as a percentage of investment. The

minimum ROI from catering services is what percentage less than the maximum ROI from

Chinese Restaurant Business.

A. 1% B. 5% C. 10% D.15% E. 0%

Set 2:

Categories of Health Insurance Claims

All the health insurance claims can be broadly classified into four types:

1. Claims for Treatment of Respiratory Diseases

2. Claims for Treatment of Cancer

3. Claims for Heart diseases

4. Claims for treatments of injuries from accidents

The chances of suffering from any of the three categories of diseases and accidents vary with age

and gender.

Children and infants (0-12 years) have negligible chance of heart diseases. Statistics show that

children are very unlikely to suffer from accidents and that chance can also be neglected for al

practical purposes. They have very high chance of respiratory diseases. Historically one out of

every 20 children gets treatment for respiratory diseases every year. The chance of they

undergoing cancer treatment in any year is about 2%.


3/5

Elderly Men (Aged above 60 years): The group suffers primarily from cardiac related issues and

chances they undergoing treatment for cardiac related problems in any year is as high as 6%. They

also have about 3% chance of suffering from respiratory diseases. The chances of suffering from

cancer and accidents for this segment is very low and is negligible.

Young and Middle aged Woman (20-60 Years) have 4% chance of cancer. Among the cancer cases

reported from this segment, almost half are cases of breast cancer. They dont generally suffe

from heart diseases, respiratory problems or accidents.

Teenage Boys (13-19 Years) suffer from accidents as they lead a very active life and are involved

in activities like rash driving and play contact sports like football and rugby. Statistics show that

about 8% of the people in this segment get treatment for accident related injuries every year. The

chances of each of the other three types of claims for this segment is about 1%.

Chance of suffering from any ailment with-in a segment can be ignored, unless specified.

Insurance Products Available in the Market

The health insurance market is dominated by five companies - IseeI, Power health (PH), Sun health

(SH), Alfa insurance (AI) and Universal health (UH).

The above chart gives the premium quoted by the five companies for the 4 different age groups.

All the companies pay the medical expenses completely.

Expected profit from a policy is annual premium less expected total health expense.

Average Expenses for each of the claims.

The following table gives the average expenses for treatment of each of the diseases or injures

from accidents, which do not vary with age and gender.

Treatment Type Average TreatmentCost

Respiratory Diseases 10,000Cancer 50,000

Heart diseases 50,000Injuries from 25,000


4/5

accidents

Expected expense for any policy holder for any ailment is product of average treatment cost and

his/her chance of suffering from that ailment. Total expected health expense is sum of expected

expenses of all the ailments. For any insured person, all the medical expenses incurred on accoun

of the four ailments will be completely provided for by his/her insurance company.

A customer will seek insurance if and only if he/she can obtain a policy whose annual premium isless than twice of that of his/her annual expected total medical expense. If there is more than one

policy that satisfies the aforementioned criterion, he will choose the one that charges the lowes

premium.

5) The expected profit is the highest for which of the following policies?

A. Alfa Insurance policy for a 61 year-old male

B. Sun health insurance policy for a 10 year-old female

C. United health insurance policy for 40 year-old female

D. Power health insurance policy for a 65 year-old male

E. IseeI insurance policy for an 18 year-old male.

6) Mr. John Smith, a 65 year old male, is interested in purchasing health insurance. Given his family

history, he believes that his chances of suffering from any ailment is about 50% more than that of

the average of the segment in which he comes under. If Alfa insurance intends to make Mr. John it

customer, it must offer a discount of at least _____ on the quoted price to make him buy its policy.

A. 1%

B. 10%

C. 20%

D. 25%

E. 33.3%

7) For each of the below statements, select TRUE, if the statement can be shown to be true from

the information given. Otherwise Choose False:

A. Among the five companies, the average premium charged per customer is lowest for United

Health (True/ False)

B. A 40 year old woman will always choose Alfa Insurance (AI) over the other four options

(True/ False)

C. The category of elderly people (those above 60 years of age) gives the highest expected

profit per policy for each of the five companies. (True/ False)

8) The standard deviation (SD) of prices offered by 5 companies is highest for ____________ age

group.


5/5

A. 0-12

B. 13-19

C. 20-60

D. Above 60

msr reasoning

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