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Jun 01'22

Exercise

The joint distribution of claim frequency and claim severity, conditional on the claim frequency being positive, is given below:

Joint distribution
Claim Size
Claim Frequency
100 300 500 1000
1 0.25 0 0.2 0
2 0 0.37 0 0.18

If the probability that the claim frequency is zero is 0.75, determine the variance of the claim frequency.

  1. 0.2475
  2. 0.5123
  3. 0.6625
  4. 0.8833
  5. 1
Jun 01'22

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