Question
Let x = 40, 8 = 0.07 and assume mortality follows DeMoivre's Law with a maximum age of 120. Determine the expected value and
Let x = 40, 8 = 0.07 and assume mortality follows DeMoivre's Law with a maximum age of 120. Determine the expected value and variance of the random variable Z40 for a whole life policy on this individual. Suppose now that 500 individuals of the type in question 1 buy insurance with a benefit of $250,000. Find the amount of money the insurer will need to hold to be 95% certain that the company will be able to pay the benefits to these individuals.
Step by Step Solution
3.36 Rating (152 Votes )
There are 3 Steps involved in it
Step: 1
To determine the expected value and variance of the random variable Z40 for a whole life policy on this individual we first need to understand DeMoivres Law DeMoivres Law models the distribution of th...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get StartedRecommended Textbook for
Probability and Random Processes With Applications to Signal Processing and Communications
Authors: Scott Miller, Donald Childers
2nd edition
123869811, 978-0121726515, 121726517, 978-0130200716, 978-0123869814
Students also viewed these Finance questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App