Part 10 - Butsic Solvency

Georgia Theocharides ( (no email) )
Wed, 22 Apr 1998 08:25:40 -0400

Does anybody know how to interpret Figure 2 on p. 665 of the Butsic
Solvency paper. The text says: "Figure 2 demonstrates that, under the
normal distribution, the EPD ratio is an increasing function of the
coefficient of variation and the ruin probability. Thus, there is no
single ruin probability corresponding to a given EPD ratio."

Yet when I look at Figure 2 the labels on the axes don't make sense to me.
What does the vertical axis label of "EPD Ratio/Ruin Probability" mean?
And why are there four different lines corresponding to various EPD ratios
when the EPD Ratio is also on the vertical axis? And how does one
determine that the EPD ratio is an increasing function of the CV and the
ruin probability and that there is no single ruin probability corresponding
to a given EPD ratio?

Thanks a lot and good luck to everybody!