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Question out of Hassett's "Probability for Risk Management"

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  • Question out of Hassett's "Probability for Risk Management"

    Hi,

    Forgive me if I posted this to the wrong group.
    p 148, 5-40

    Summary: Insurance pays nothing for first snow storm, 10k for each one thereafter. Poisson lambda = 1.5. What is the expected amount paid during a 1 year period?

    I'm getting 5k. When I look in the solution manual, it has
    (basically) 5k+10k*p(0) = 5k + 10k * 0.2231 = 5k + 2231.30 = 7231

    Where did the 10k with the p(0) come from? Or is this a misprint?

    Thanks...

  • #2
    Originally posted by The_Original_SoCal_Big_J View Post
    Hi,

    Forgive me if I posted this to the wrong group.
    p 148, 5-40

    Summary: Insurance pays nothing for first snow storm, 10k for each one thereafter. Poisson lambda = 1.5. What is the expected amount paid during a 1 year period?

    I'm getting 5k. When I look in the solution manual, it has
    (basically) 5k+10k*p(0) = 5k + 10k * 0.2231 = 5k + 2231.30 = 7231

    Where did the 10k with the p(0) come from? Or is this a misprint?

    Thanks...
    This question is directly from SOA samples. Question no is 50. You may want to read this which some other people explained.

    Comment


    • #3
      thanks beancounter.
      That makes sense, finally. (I asked 2 soon-to-be PhDs, and they missed it too)

      Comment


      • #4
        Originally posted by The_Original_SoCal_Big_J View Post
        thanks beancounter.
        That makes sense, finally. (I asked 2 soon-to-be PhDs, and they missed it too)
        Or search on this forum: http://www.actuary.com/actuarial-dis...hlight=poisson (the point is... use the search feature, a lot of the questions have been asked about and re-asked).

        Comment


        • #5
          Thanks. I tried to search, but wasn't sure where to look.

          Comment

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