. A collection of insurance policies consists of two types. 25% of policies are Type 1...

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. A collection of insurance policies consists of two types. 25% of policies are Type 1 and 75% of policies are Type 2. For a policy of Type 1, the loss amount per year follows an exponential distribution with mean 200, and for a policy of Type 2, the loss amount per year follows a Pareto distribution with parameters a = 3 and 0 = 200. For a policy chosen at random from the entire collection of both types of policies, find the probability that the annual loss will be less than 100, and find the average loss. . A collection of insurance policies consists of two types. 25% of policies are Type 1 and 75% of policies are Type 2. For a policy of Type 1, the loss amount per year follows an exponential distribution with mean 200, and for a policy of Type 2, the loss amount per year follows a Pareto distribution with parameters a = 3 and 0 = 200. For a policy chosen at random from the entire collection of both types of policies, find the probability that the annual loss will be less than 100, and find the average loss.

Answer rating: 100% (QA)

To find the probability that the annual loss will be less than 100 we need to consider the probabili... View the full answer