Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

b) 5 pts Determine the probability that the aggregate claims amount from the portfolio is equal to 3.6. A portfolio consists of 3 independent insurance

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
b) 5 pts Determine the probability that the aggregate claims amount from the portfolio is equal to 3.6. A portfolio consists of 3 independent insurance policies with probabilities of a claim and claim amount distributions (given there is a claim) given in the following table. Policy i Prob of a claim qi P(B; = 1 ) P(B; = 2) P(Bi = 3) P(Bi = 4) 1 0.05 0.5 0.2 0.3 0 2 0.01 0.5 0 0.5 0 3 0.10 0.5 0 0 0.5 a) 5 pts Determine the mean of the aggregate claims from the portfolio.c) 5 ptsAssuming the compound Poisson approximation with mmtching means, use the recursive formula for the (a,b,0) class to determine the probability that the aggregate claims amount is greater than 2. d) 5 pts Assuming a. normal approximation for the claim amount for each policy, determine the probability that the aggregate claims amount is greater than 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance and Public Policy

Authors: Jonathan Gruber

5th edition

1464143331, 978-1464143335

More Books

Students also viewed these Finance questions