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A firm estimates that in any given year, it has a 60 percent chance of having no losses, a 30 percent chance of having 1
A firm estimates that in any given year, it has a 60 percent chance of having no losses, a 30 percent chance of having 1 loss, and a 10 percent chance of having 2 losses. For this firm, loss frequency is best estimated at: O losses per year 2 losses per year 0.5 losses per year 1 loss per year A firm estimates that, for each exposure unit, it has an 80 percent chance of having $0 in losses, a 15 percent chance of having losses of $10,000, and a 5 percent chance of having losses equal to $30,000. In this case, loss severity per exposure unit is: $13,333 $0 $3,000 $20,000 $1,500 A firm estimates that, for each exposure unit, it has an 80 percent chance of having $0 in losses, a 15 percent chance of having losses of $10,000, and a 5 percent chance of having losses equal to $30,000. In this case, the 95 percent probable maximum loss (PML) for each exposure unit is: O $30,000 $1,500 $20,000 $10,000
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