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ABy Admin
Jun 01'22

Exercise

An insurer sells two types of policies. The claim frequency for a single coverage period for each type policy is given below:

Frequency Type A Type B
0 0.4 0.2
1 0.3 0.4
2 0.3 0.2

A type of policy is randomly selected with type A being three times as likely to be selected as type B. If a sample claim frequency equalling 2 is observed for the selected policy type, what is the probability that a new sample claim frequency is less than 2 for the selected policy type.

  1. 0.57
  2. 0.6
  3. 0.6563
  4. 0.6818
  5. 0.7
ABy Admin
Jun 01'22

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