I understand how to do the problem, my proble is in the first
empirical limited expected value for 6000. They do the following:
En[X;6000]=1810= (30*6000+1700* C+270*6000)/2000
now, since the total loss between 6000-7000 is given, 200000, why
don't they use it here??? Where C is the claim size for the 1700
claims that you can find and substitute in the second part of the
problem. I did not do it exactly like the solution in the book, but
it comes back the the same thing.
Now in the second part of the problem,
En[X;7000]=[1700*C+ 200000+270*7000]/2000
here they use the real total loss value why is that?
Where C was found inthe first part of the problem.
Dimitra
dr@g-g-a.com