exercise:708257f4d7: Difference between revisions
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Year 1 ground-up losses have an exponential distribution with mean $1,250. Inflation of 5% impacts all claims from year 1 to year 2. The policy has a deductible of $400 in effect during years 1 and 2. If x<sub>1</sub> denotes the probability that non-zero payments exceed $500 in year 1 and x<sub>2</sub> denotes the probability that non-zero payments exceed $500 in year 2, determine the ratio x<sub>2</sub>/x<sub>1</sub>. | Year 1 ground-up losses have an exponential distribution with mean $1,250. Inflation of 5% impacts all claims from year 1 to year 2. The policy has a deductible of $400 in effect during years 1 and 2. If x<sub>1</sub> denotes the probability that non-zero payments exceed $500 in year 1 and x<sub>2</sub> denotes the probability that non-zero payments exceed $500 in year 2, determine the ratio x<sub>2</sub>/x<sub>1</sub>. | ||
< | <ul class="mw-excansopts"> | ||
<li>[0.5, 0.7]</li> | <li>[0.5, 0.7]</li> | ||
<li>[0.98, 1.03]</li> | <li>[0.98, 1.03]</li> | ||
| Line 7: | Line 7: | ||
<li>[1.3, 1.4]</li> | <li>[1.3, 1.4]</li> | ||
<li>1.5+</li> | <li>1.5+</li> | ||
</ | </ul> | ||
Revision as of 21:09, 17 March 2024
Year 1 ground-up losses have an exponential distribution with mean $1,250. Inflation of 5% impacts all claims from year 1 to year 2. The policy has a deductible of $400 in effect during years 1 and 2. If x1 denotes the probability that non-zero payments exceed $500 in year 1 and x2 denotes the probability that non-zero payments exceed $500 in year 2, determine the ratio x2/x1.
- [0.5, 0.7]
- [0.98, 1.03]
- [1.1, 1.2]
- [1.3, 1.4]
- 1.5+