The Statewide Auto Insurance Company developed the following probability distribution for automobile collision claims paid during the past year: Payment (\$) Probability 0 ............ 0.83 500 ............0.06 1,000 .............0.05 2,000 ............0.02 5,000 ............0.02 8,000 ............0.01 10,000 ............ 0.01 a. Set up intervals of random numbers that can be used to generate automobile collision claim payments. b. Using the first 20

Chapter 16, Problems #6

The Statewide Auto Insurance Company developed the following probability distribution for automobile collision claims paid during the past year:

Payment (\$) Probability

0 ............ 0.83

500 ............0.06

1,000 .............0.05

2,000 ............0.02

5,000 ............0.02

8,000 ............0.01

10,000 ............ 0.01

a. Set up intervals of random numbers that can be used to generate automobile collision claim payments.

b. Using the first 20 random numbers in column 4 of Table, simulate the payments for 20 policyholders. How many claims are paid and what is the total amount paid to the policyholders?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...