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Consider the following collective risk model: (i) The claim count random variable N is Poisson with mean 3. (ii) The severity random variable has the following probability (mass) function: Px (1) = 0.6, px (2) = 0.4. (iii) As usual, individual loss random variables are mutually independent and independent of N. Assume that an insurance covers aggregate losses subject to a deductible d = 3. Find the expected value of aggregate payments for this insurance.

Consider the following collective risk model: (i) The claim count random variable N is Poisson with mean 3. (ii) The severity random variable has the following probability (mass) function: Px (1) = 0.6, px (2) = 0.4. (iii) As usual, individual loss random variables are mutually independent and independent of N. Assume that an insurance covers aggregate losses subject to a deductible d = 3. Find the expected value of aggregate payments for this insurance.

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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Problem 10.3. Consider the following collective risk model: (i) The claim count random variable N is Poisson with mean 3. (ii) The severity random variable has the following probability (mass) function: Px (1) = 0.6, px (2) = 0.4. Source: Based on Problem #165 from sample C Exam. (iii) As usual, individual loss random variables are mutually independent and independent of N. Assume that an insurance covers aggregate losses subject to a deductible d = 3. Find the expected value of aggregate payments for this insurance.
Transcribed Image Text:Problem 10.3. Consider the following collective risk model: (i) The claim count random variable N is Poisson with mean 3. (ii) The severity random variable has the following probability (mass) function: Px (1) = 0.6, px (2) = 0.4. Source: Based on Problem #165 from sample C Exam. (iii) As usual, individual loss random variables are mutually independent and independent of N. Assume that an insurance covers aggregate losses subject to a deductible d = 3. Find the expected value of aggregate payments for this insurance.
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