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  • Soa #50

    I don't completely understand SOA #50.

    The question is:
    A company buys a policy to insure its revenue in the event of major snowstorms that shut down business. The policy pays nothing for the first such snowstorm of the year and 10,000 for each one thereafter, until the end of the year. The number of major snowstorms per year that shut down business is assumed to have a Poisson distribution with mean 1.5 . What is the expected amount paid to the company under this policy during a one-year period?
    (A) 2,769
    (B) 5,000
    (C) 7,231
    (D) 8,347
    (E) 10,578

    The solution is on page 21 here: http://beanactuary.com/exams/ExamPSamplesolutions.pdf.

    I'm confused on how they changed the series from one that starts with n = 1 to one that starts with n = 0. Can someone please explain this to me. Thanks a bunch!

  • #2
    Originally posted by JHUStudent View Post
    I don't completely understand SOA #50.

    I'm confused on how they changed the series from one that starts with n = 1 to one that starts with n = 0. Can someone please explain this to me. Thanks a bunch!

    Click this link for my explanation.
    (/

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    • #3
      dont mean to hijack the thread, but i have a related question

      let say instead of doing summation im integrating

      ie

      Integral from 3 to Infinity of x*exp(-x)

      the solution changes it to:

      Integral from 0 to Infinity of (x+3)*exp(-x-3)

      i do not see how these two are equalvilant

      Comment


      • #4
        Originally posted by akirika View Post
        dont mean to hijack the thread, but i have a related question

        let say instead of doing summation im integrating

        ie

        Integral from 3 to Infinity of x*exp(-x)

        the solution changes it to:

        Integral from 0 to Infinity of (x+3)*exp(-x-3)

        i do not see how these two are equalvilant
        It is a little change of variables. You can also think of it as a u substitution. Basically you are shifting the curve by 3 units.
        (/

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