Question
Use the following data to answer the following questions. A. Determine the mean and standard deviation statistics for the frequency and severity distributions respectively. Show
Use the following data to answer the following questions.
A. Determine the mean and standard deviation statistics for the frequency and severity distributions respectively. Show your calculation.
B. Calculate the mean and standard deviation of the aggregate loss distribution from your answers to question A.1 Show your calculation.
C. Determine the aggregate loss distribution by calculating the probability of each outcome analytically. Show your calculation.
D. Simulate the aggregate loss distribution. Use the FREQUENCY() function to summarize your simulation as a probability distribution of all possible outcomes. You should conduct with simulation with N=100 trials and N=1000 trials.
E. Calculate the mean and standard deviation of simulated aggregate losses using your probability distribution from part D. Discuss how well you were able to replicate the actual distribution and compare your simulation results based on 100 trial and 1000 trials.
F. Plot in a chart the actual probability distribution based on part C and the two loss distributions based upon the N=100 and N=1000 trials. (That is, you should draw three graphs for this question.)
Frequency # Claims Prob 0 .5 1 .2 2 .3 Loss 500 3000 5000 Severity Prob 1/3 1/3 1/3 1 2 Mean of the aggregate loss distribution: u = Uf Xus where f is the mean of the frequency and u, is the mean of the severity. Variance of the aggregated loss distribution: 2 . where o is the variance of the frequency and oz is the variance of the severity. Frequency # Claims Prob 0 .5 1 .2 2 .3 Loss 500 3000 5000 Severity Prob 1/3 1/3 1/3 1 2 Mean of the aggregate loss distribution: u = Uf Xus where f is the mean of the frequency and u, is the mean of the severity. Variance of the aggregated loss distribution: 2 . where o is the variance of the frequency and oz is the variance of the severityStep by Step Solution
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