Consider that Emily and Samantha face the same probability distribution for losses. Assume their claims are...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider that Emily and Samantha face the same probability distribution for losses. Assume their claims are independent. The loss distribution is Loss amount. probability 0 1000 4000 7 .2 .1 a. Calculate Emily's expected loss and variance b. If Emily and Samantha form a pool in which losses are shared equally, calculate the expected loss per person, and the expected variance in losses per person. (hint: you first have to calculate the possible loss outcomes in the pool, divide by 2 to get the losses per person, and calculate the associated probabilities.) c. What happened to expected losses per person and variance in losses per person when the pool was formed? Consider that Emily and Samantha face the same probability distribution for losses. Assume their claims are independent. The loss distribution is Loss amount. probability 0 1000 4000 7 .2 .1 a. Calculate Emily's expected loss and variance b. If Emily and Samantha form a pool in which losses are shared equally, calculate the expected loss per person, and the expected variance in losses per person. (hint: you first have to calculate the possible loss outcomes in the pool, divide by 2 to get the losses per person, and calculate the associated probabilities.) c. What happened to expected losses per person and variance in losses per person when the pool was formed?
Expert Answer:
Answer rating: 100% (QA)
To calculate Emilys expected loss we multiply each loss amount by its corresponding probability and ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Evaluate the stiffness matrix for the elements shown in Figure P11-6. Let E = 100 GPa and v = 0.3? Figure P11-6, (a) (b) (25, 25.0) 2 (10, 0, 0) (40, 0,0) (25, 0, 25) (10, 7, 0) (4, 2, 0) (12, 2, 0)...
-
What are liability gains and losses, and how are they accounted for?
-
Water flows in a 3-cm-diameter pipe at a velocity of \(0.55 \mathrm{~m} / \mathrm{s}\). The volume flow rate of water in the pipe is (a) \(23.3 \mathrm{~L} / \mathrm{min}\) (b) \(0.39 \mathrm{~L} /...
-
How trials may be affected by social media sites?
-
You are considering opening a copy service in the student union. You estimate your fixed cost at $15,000 and the variable cost of each copy sold at $.01. You expect the selling price to average $.05....
-
19. Telephone calls come into a 24-hour airline call center (handling calls worldwide) randomly at the mean rate of 15 calls per hour. The time between calls follows an exponential distribution with...
-
Match correct purposes, contents, and users regarding SOC reports. Purposes/Contents/Users a. Easy to read by the general public in a summary format on security, availability, processing integrity,...
-
Consider three securities: Asset 1 with expected return of 14% and standard deviation of return of 6%, Asset 2 with average return of 8% and standard deviation of returns of 3%, and Asset 3 with mean...
-
Read the Ideas in Action feature in this chapter. For each question, write a one- or two-paragraph answer. A. Melanie Whelan suggests you should come prepared for every professional conversation....
-
Write a message that targets university students and persuades them to start a retirement account. Youll find lots of information online about the benefits of starting a retirement account early....
-
Write a sales letter that targets university students and promotes joining a local bank. Find information online about local credit unions and banks, select the financial institution that interests...
-
Read the Ideas in Action feature of Googles Karen May. Respond to the following questions: A. Karen May suggests you shouldnt hold a feedback conversation unless you have some guidance or solutions....
-
Andrew McAfee, one of the premier experts on Enterprise 2.0 systems, commented about the challenges of adopting such systems and the shift in orientation needed by management to unleash a culture of...
-
IConia-high tech company - can pay suppliers in the quarter after it has sold to customers. Iconia has 25% net profit margin and is reporting the following in its quarterly reports Income Statement...
-
The following selected information was taken from Sun Valley Citys general fund statement of revenues, expenditures, and changes in fund balance for the year ended December 31, 2019: Revenues:...
-
Frank Willingham has the following transactions during the year: Sale of office equipment on March 15 that cost $20,000 when purchased on July 1, 2010. Frank has claimed $5,000 in depreciation and...
-
In 2012, Margaret and John Murphy are married taxpayers who file a joint tax return with AGl of $25,000. During the year they incurred the following expenses: Hospitalization insurance...
-
Russell (age 50) and Linda (age 45) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called...
-
Sixty adults with gum disease were asked the number of times per week they used to floss before their diagnosis. The (incomplete) results are shown in Table 1.14. a. Fill in the blanks in Table 1.14....
-
A scholarly article about response rates begins with the following quote: Declining contact and cooperation rates in random digit dial (RDD) national telephone surveys raise serious concerns about...
-
Nineteen immigrants to the U.S were asked how many years, to the nearest year, they have lived in the U.S. The data are as follows: 2; 5; 7; 2; 2; 10; 20; 15; 0; 7; 0; 20; 5; 12; 15; 12; 4; 5; 10. a....
Study smarter with the SolutionInn App