PRMIA Exam 8010 Topic 8 Question 65 Discussion

Actual exam question for PRMIA's 8010 exam

Question #: 65
Topic #: 8

[All 8010 Questions]

Which of the following are valid approaches for extreme value analysis given a dataset:

1. The Block Maxima approach

2. Least squares approach

3. Maximum likelihood approach

4. Peak-over-thresholds approach

A2 and 3

B1, 3 and 4

C1 and 4

DAll of the above

Show Suggested Answer

Suggested Answer: C

For EVT, we use the block maxima or the peaks-over-threshold methods. These provide us the data points that can be fitted to a GEV distribution.

Least squares and maximum likelihood are methods that are used for curve fitting, and they have a variety of applications across risk management.

by Mireya at Jan 09, 2025, 05:49 PM

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Odelia

6 days ago

Maximum likelihood is definitely the way to go. It's like finding the best-fitting party hat for your head - you want the one that fits just right!

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Laquanda

10 days ago

I think the valid approaches for extreme value analysis are the Block Maxima approach and the Peak-over-thresholds approach.

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Pansy

10 days ago

The Block Maxima approach makes the most sense to me. It's like going to the gym and only counting the heaviest weights you lifted - the real extremes!

upvoted 0 times

Kelvin

4 days ago

I think the Maximum likelihood approach is also valid for extreme value analysis, as it estimates the parameters of the distribution that best fits the data.

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Alyce

5 days ago

I agree, the Block Maxima approach focuses on the highest values, which can be important for extreme value analysis.

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