Question
Case You are working as an analyst at AMH Hospital. AMH wants to put money into a pool and then use that money to pay
Case You are working as an analyst at AMH Hospital. AMH wants to put money into a pool and then use that money to pay for losses that arise from medical malpractice claims (liability suits). They have asked you to determine how much money they must put into the pool so they can pay for losses. AMH leadership has provided information for you regarding the outcomes of interest. Table 1 Column (1) Column (2) Column (3) Outcome: # of liability suits per month # of months probability 0 30 0.25 1 24 0.20 2 35 0.29 3 31 ? Answer questions 1 - 5 using Table 1. 1. Which columns are the probability distribution? 2. What is the random variable? 3. What risk management measure does this table represent? 4. Calculate the expected frequency. Make sure you include the correct units. 5. Interpret your answer in part 4.
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