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4. Losses follow a two-parameter Pareto distribution with a = 2 and 0 = 5000. An insurance policy pays the following for each loss: There
4. Losses follow a two-parameter Pareto distribution with a = 2 and 0 = 5000. An insurance policy pays the following for each loss: There is no insurance payment for the first 1000. For losses between 1000 and 6000, the insurance pays 80%. For any remaining part of the loss, the insurance pays 90% of the loss. (a) Provide an expression for the claim payment per loss random variable in terms of a loss of X. (b) Calculate the expected claim payment per loss. 4. Losses follow a two-parameter Pareto distribution with a = 2 and 0 = 5000. An insurance policy pays the following for each loss: There is no insurance payment for the first 1000. For losses between 1000 and 6000, the insurance pays 80%. For any remaining part of the loss, the insurance pays 90% of the loss. (a) Provide an expression for the claim payment per loss random variable in terms of a loss of X. (b) Calculate the expected claim payment per loss
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