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Claims are reported to a car insurance company according to a Poisson process with an average of 5 claims per day. The USD amount of
Claims are reported to a car insurance company according to a Poisson process with an average of 5 claims per day. The USD amount of each claim follows an exponential distribution with mean $2,000. Suppose that all claims and the total number of reported claims are independent of each other. (a) Compute the expected total sum of claims (i.e., the total USD amount) after one week. (b) Find the probability that at least one claim with claim size $12,000 or higher will be reported to the insurance company within one week.
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