Additive v/s Multiplicative (Discount/premium)

Sanjay Sachdev

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Hey Guys,
I just wanna know while measuring Discount or Control premium,etc sometimes we ADD them and sometimes we MULTIPLY…for instance, in build up approach we use to ADD all the premiums/risk factors like smaller size company, industry/company specific factors,etc. whereas, while measuring DLOM we multiply it with DLOC…plz throw some light on this !
 
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