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'''Solution: E''' | '''Solution: E''' | ||
Let X and Y denote the annual cost of maintaining and repairing a car before and after the 20% tax, respectively. Then Y = 1.2X and Var[Y] = Var[1.2X] = (1.2)2 Var[X] = | Let X and Y denote the annual cost of maintaining and repairing a car before and after the 20% tax, respectively. Then Y = 1.2X and Var[Y] = Var[1.2X] = (1.2)<sup>2</sup> Var[X] = | ||
(1.2)2(260) = 374.4. | (1.2)<sup>2</sup>(260) = 374.4. | ||
{{soacopyright | 2023}} | {{soacopyright | 2023}} | ||
Latest revision as of 12:04, 3 July 2024
Solution: E
Let X and Y denote the annual cost of maintaining and repairing a car before and after the 20% tax, respectively. Then Y = 1.2X and Var[Y] = Var[1.2X] = (1.2)2 Var[X] = (1.2)2(260) = 374.4.
Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.