In July 1998 the lagged reserve accounting (LRA) system replaced a contemporaneous reserve…

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In July 1998 the lagged reserve accounting (LRA) system replaced a contemporaneous reserve accounting (CRA) system as the method of reserve calculation for DIs.

a. Contrast a contemporaneous reserve accounting (CRA) system with a lagged reserve accounting (LRA) system.

b. Under which accounting system, CRA or LRA, are DI reserves higher? Why?

c. Under which accounting system, CRA or LRA, is DI uncertainty higher? Why?

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