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A company prices its hurricane insurance using the following assumptions: i. In any calendar year, there can be at most one hurricane. ii. In any calendar year, the probability of a hurricane is 0.07. iii. The number of hurricanes in any calendar year is independent of the number of hurricanes in any other calendar year. Using the company's assumptions, calculate the probability that there are fewer than 3 hurricanes in a 20-year period.

A company prices its hurricane insurance using the following assumptions: i. In any calendar year, there can be at most one hurricane. ii. In any calendar year, the probability of a hurricane is 0.07. iii. The number of hurricanes in any calendar year is independent of the number of hurricanes in any other calendar year. Using the company's assumptions, calculate the probability that there are fewer than 3 hurricanes in a 20-year period.

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Subject-Actuarial maths

A company prices its hurricane insurance using the following assumptions: i. In any calendar year, there can be at most one hurricane. ii. In any calendar year, the probability of a hurricane is 0.07. iii. The number of hurricanes in any calendar year is independent of the number of hurricanes in any other calendar year. Using the company's assumptions, calculate the probability that there are fewer than 3 hurricanes in a 20-year period.
Transcribed Image Text:A company prices its hurricane insurance using the following assumptions: i. In any calendar year, there can be at most one hurricane. ii. In any calendar year, the probability of a hurricane is 0.07. iii. The number of hurricanes in any calendar year is independent of the number of hurricanes in any other calendar year. Using the company's assumptions, calculate the probability that there are fewer than 3 hurricanes in a 20-year period.
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