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1. The net balance in a surplus process is only checked annually. The aggregate claims process is compound Poisson with an annual claims rate of 0.5, the loading factor for premiums is 0 = 0.2, initial reserves are U = 0.5, and the typical claim is uniformly distributed on {1,2,3}. Determine the probability that the aggregate surplus is nonnegative for the first two years. What would the answer be if the claim rate were doubled and the loading factor halved?

1. The net balance in a surplus process is only checked annually. The aggregate claims process is compound Poisson with an annual claims rate of 0.5, the loading factor for premiums is 0 = 0.2, initial reserves are U = 0.5, and the typical claim is uniformly distributed on {1,2,3}. Determine the probability that the aggregate surplus is nonnegative for the first two years. What would the answer be if the claim rate were doubled and the loading factor halved?

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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1. The net balance in a surplus process is only checked annually. The aggregate claims process is compound Poisson with an annual claims rate of 0.5, the loading factor for premiums is 0 = 0.2, initial reserves are U = 0.5, and the typical claim is uniformly distributed on {1,2,3}. Determine the probability that the aggregate surplus is nonnegative for the first two years. What would the answer be if the claim rate were doubled and the loading factor halved?
Transcribed Image Text:1. The net balance in a surplus process is only checked annually. The aggregate claims process is compound Poisson with an annual claims rate of 0.5, the loading factor for premiums is 0 = 0.2, initial reserves are U = 0.5, and the typical claim is uniformly distributed on {1,2,3}. Determine the probability that the aggregate surplus is nonnegative for the first two years. What would the answer be if the claim rate were doubled and the loading factor halved?
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