Can any one else shed any light on this?
Good Luck to all!
-----Original Message-----
From: jbkelly@genre.com [mailto:jbkelly@genre.com]
Sent: Mittwoch, 27. Oktober 1999 01:08
To: studygroup4B@lists.casact.org
Subject: May 1995 Q 22 - insurer's expected annual
pmt
losses follow a pareto (a=2, l=1000)
10 losses are expected each year
insurer pays the whole amount of those claims above 100
My question is why don't we divide by the probability of
being greater than
100 [s(100)]?
My thought (WRONG) was that the insurer's average payment
is (the total
amount of all the payments ) divided by (the number of
payments.)
****
When is it required to divide by s(100)? Will the problem
specifically say
NONZERO payments? Are there any other phrases that would
indicate nonzero
payments only?
****
wait to scroll down if you want to work it out be for seeing
the answer
here's the answer: E[x] - E[X,100] + 100s(100)
I did this (which is wrong) : E[x] - E[X,100] + 100s(100)
/ s(100). I
interpeted the problem wrong and found the average of
nonzero payments ( I
think).
-john