$(2$ point$)$ Describe possible distation with the Pure Premium approach and why the Loss Ratio

approach may be better.

$(8$ points$)$ Given the following information, answer i$.$ and ii$.($Note: $2b$ is the base class$)$

i$.$ Given that the indicated pure premium for the base class is $$30,$ find the exposures that

were used in the Pure Premium approach to calculate the indicated rate relativities

$($relative to the base class$)$ given in column $4.$

ii$.$ Find the current relativities used in the Loss Ratio approach to calculate the indicated rate

relativities $($relative to the base class$)$ given in column $5.$