RBC charge under the equity approach equals which expression?

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Multiple Choice

RBC charge under the equity approach equals which expression?

Under the equity approach, the RBC charge for an affiliate is the parent’s share of the affiliate’s required RBC, but it cannot exceed the value of the investment itself. In other words, you take affiliate RBC × ownership percentage, and then cap it at the book (or adjusted carrying) value of the stock. The smaller of these two amounts is the RBC charge. For example, if the affiliate’s RBC is 100 and ownership is 25%, the share would be 25. If the stock carrying value is 20, the charge is 20; if the carrying value is 40, the charge is 25. This caps the charge at the actual value of the investment, ensuring the requirement reflects both the affiliate’s risk and the investment’s value.

Under the equity approach, the RBC charge for an affiliate is the parent’s share of the affiliate’s required RBC, but it cannot exceed the value of the investment itself. In other words, you take affiliate RBC × ownership percentage, and then cap it at the book (or adjusted carrying) value of the stock. The smaller of these two amounts is the RBC charge.

For example, if the affiliate’s RBC is 100 and ownership is 25%, the share would be 25. If the stock carrying value is 20, the charge is 20; if the carrying value is 40, the charge is 25. This caps the charge at the actual value of the investment, ensuring the requirement reflects both the affiliate’s risk and the investment’s value.

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