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'''Solution: B'''
'''Solution: D'''


Let <math>X</math> be the number of burglaries. Then,
The cumulative distribution function for the exponential distribution is
 
<math display =  "block">
F(x) = 1-e^{-\lambda x} = 1-e^{-x/\mu} = 1-e^{-x/100}, x > 0.
</math>
 
From the given probability data,


<math display = "block">
<math display = "block">
\begin{align*}
\begin{align*}
\operatorname{E}(X | X \geq 2) = \frac{\sum_{x=2}^{\infty}xp(x)}{1-p(0)-p(1)} &= \frac{\sum_{x=0}^{\infty}xp(x)-(0)p(0)-(1)p(1)}{1-p(0)-p(1)} \\
F(50) - F(40) &= F(r) - F(60) \\
&=  \frac{1-p(1)}{1-p(0)-p(1)} = \frac{1-e^{-1}}{1-e^{-1}-e^{-1}} = 2.39.
1-e^{-50/100} - (1-e^{-40/100}) &= 1-e^{-r/100} - (1-e^{-60/100}) \\
e^{-40/100} - e^{-50/100} &= e^{-60/100} - e^{-r/100} \\
e^{-r/100} &= e^{-60/100} - e^{-40/100} + e^{-50/100} = 0.4850 \\
-r/100 &= \ln(0.4850) = -0.7236 \\
r &= 72.36.
 
\end{align*}
\end{align*}
</math>
</math>


{{soacopyright | 2023}}
{{soacopyright | 2023}}

Latest revision as of 22:39, 2 May 2023

Solution: D

The cumulative distribution function for the exponential distribution is

[[math]] F(x) = 1-e^{-\lambda x} = 1-e^{-x/\mu} = 1-e^{-x/100}, x \gt 0. [[/math]]

From the given probability data,

[[math]] \begin{align*} F(50) - F(40) &= F(r) - F(60) \\ 1-e^{-50/100} - (1-e^{-40/100}) &= 1-e^{-r/100} - (1-e^{-60/100}) \\ e^{-40/100} - e^{-50/100} &= e^{-60/100} - e^{-r/100} \\ e^{-r/100} &= e^{-60/100} - e^{-40/100} + e^{-50/100} = 0.4850 \\ -r/100 &= \ln(0.4850) = -0.7236 \\ r &= 72.36. \end{align*} [[/math]]

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.