1. F(x) = 1 - (x0/x)^a, x>x0, or

2. F(x) = 1 - (x0/(x+x0))^a, x>0 ?

The first, as well as I understand, is a standard definition for 2-parametric Pareto distribution. Two of the recommended manuals for exam P - Hassett & Stewart, and Wackerly, Mendenhall, & Scheaffer - use the definition.

The second definition is used by Bean.

The three other recommended manuals describe 1-parameter Pareto distribution only, using definition 1 with x0=1.

The expected values calculated according to definitions 1 and 2 differ by x0. For example, in the following mock exam problem

http://www.math.ilstu.edu/krzysio/4-2-5-KO-Exercise.pdf

the answers would be $750 and $250 respectively.

Which of the two definitions is considered standard in actuarial exams?

2. F(x) = 1 - (x0/(x+x0))^a, x>0 ?

The first, as well as I understand, is a standard definition for 2-parametric Pareto distribution. Two of the recommended manuals for exam P - Hassett & Stewart, and Wackerly, Mendenhall, & Scheaffer - use the definition.

The second definition is used by Bean.

The three other recommended manuals describe 1-parameter Pareto distribution only, using definition 1 with x0=1.

The expected values calculated according to definitions 1 and 2 differ by x0. For example, in the following mock exam problem

http://www.math.ilstu.edu/krzysio/4-2-5-KO-Exercise.pdf

the answers would be $750 and $250 respectively.

Which of the two definitions is considered standard in actuarial exams?

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