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A flood insurance policy has the following distribution this year: 1. The frequency of claims has a Poisson distribution with = 4. 2. The severity of claims has a Pareto distribution with a = 5 and 0 = 6. Next year, the severity of claims is expected to increase by 20%. The frequency of claims is expected to have the same distribution. A deductible of 1 per claim is imposed both this year and the next. Calculate the expected value of the aggregate annual payments for the insurer next year. A B с D E 3.21 3.76 4.28 4.86 5.58

A flood insurance policy has the following distribution this year: 1. The frequency of claims has a Poisson distribution with = 4. 2. The severity of claims has a Pareto distribution with a = 5 and 0 = 6. Next year, the severity of claims is expected to increase by 20%. The frequency of claims is expected to have the same distribution. A deductible of 1 per claim is imposed both this year and the next. Calculate the expected value of the aggregate annual payments for the insurer next year. A B с D E 3.21 3.76 4.28 4.86 5.58

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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A flood insurance policy has the following distribution this year: 1. The frequency of claims has a Poisson distribution with 2 = 4. 2. The severity of claims has a Pareto distribution with a = 5 and 0 = 6. Next year, the severity of claims is expected to increase by 20%. The frequency of claims is expected to have the same distribution. A deductible of 1 per claim is imposed both this year and the next. Calculate the expected value of the aggregate annual payments for the insurer next year. A 3.21 в 3.76 4.28 D 4.86 E 5-58
Transcribed Image Text:A flood insurance policy has the following distribution this year: 1. The frequency of claims has a Poisson distribution with 2 = 4. 2. The severity of claims has a Pareto distribution with a = 5 and 0 = 6. Next year, the severity of claims is expected to increase by 20%. The frequency of claims is expected to have the same distribution. A deductible of 1 per claim is imposed both this year and the next. Calculate the expected value of the aggregate annual payments for the insurer next year. A 3.21 в 3.76 4.28 D 4.86 E 5-58
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