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The underlying loss distribution for an individual claim amount, X, that occurs this year follows a Pareto distribution with = 2.5 and = 1000. a.
The underlying loss distribution for an individual claim amount, X, that occurs this year follows a Pareto distribution with = 2.5 and = 1000. a. Calculate the expected loss amount for an individual claim i.e. find E[X]. b. Suppose the policy has a policy limit of 5000. Calculate the expected payment per loss. i.e. calculate E(X ^ 5000).
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