Question
The number of major earthquakes is given by Poisson Distribution with mean of 0.05 per year. A fund is estabilished to $1000 per major earthquake.
The number of major earthquakes is given by Poisson Distribution with mean of 0.05 per year. A fund is estabilished to $1000 per major earthquake. The fund charges an annual premium, payable at the start of each year, of 60. The fund has initial balance of 300 before the first premium. Claims are paid immediately when there is a major earthquake. If the fund ever runs out of money, it immediately ceases to exist. Assuming no investment income and no expenses, what is the probability that the fund is still functioning after 30 years?
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Introductory Statistics
Authors: Prem S. Mann
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