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Exercise


ABy Admin
Apr 29'23

Answer

Solution: B

Apply Baye’s Formula:

[[math]] \begin{align*} \operatorname{P}[Seri| Surv] &= \frac{\operatorname{P}[Surv. | Seri.] \operatorname{P}[Seri.]}{\operatorname{P}[Surv. | Crit.] \operatorname{P}[ Crit.] + \operatorname{P}[Surv. | Seri.] \operatorname{P}[Seri.] + \operatorname{P}[Surv. | Stab.] \operatorname{P}[Stab.]} \\ &= \frac{( 0.9 )( 0.3)}{( 0.6 )( 0.1) + ( 0.9 )( 0.3) + ( 0.99 )( 0.6 )} \\ &= 0.29. \end{align*} [[/math]]

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

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