Practice_problemsTopic4AnswerKeySpring2003

Practice_problemsTop - Solution Set for Practice Problems Topic 4 Spring 2003 1 Alamo Rental Car Company Note some of you have a slightly incorrect

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Spring 2003 1. Alamo Rental Car Company Note: some of you have a slightly incorrect version of this problem as there was a change in the numbers given for the # of losses per month per car. This was apparently due to some random event in cyber space that caused a number to appear twice. The data below is correct. You will not be penalized in grading if you received the incorrect version as long as you did the problem correctly. a. Random variable- # of losses per car per month. b. Mean: (0)(.05) + (1)(.25) + (2)(.30) + (3)(.05) + (4) (.10) + (5)(.25) = 2.65 losses per car per month c. Number Mean Diff. From Mean Diff. Squared Prob. Diff. Squared times prob. 0 2.65 -2.65 7.02 .05 .351 1 2.65 -1.65 2.72 .25 .68 2 2.65 -.65 .42 .30 .126 3 2.65 .35 .12 .05 .006 4 2.65 1.35 1.82 .10 .182 5 2.65 2.35 5.52 .25 1.38 Variance = 2.725 Standard Deviation is the square root of the variance: S.D.= 1.65 Coefficient of variation = standard deviation / mean =1.65/ 2.65= .62 d. The units of measure are : Mean: losses per car per month Variance: (losses per car per month) 2 Std deviation: losses per car per month Coefficient of Variation: unitless or a percentage e. The losses are always $1200. Therefore severity is NOT random. The expected total loss per car per month is 2.65*1200= $3180.
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This note was uploaded on 04/28/2011 for the course RMI 2901 taught by Professor Manaka during the Spring '11 term at Temple.

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Practice_problemsTop - Solution Set for Practice Problems Topic 4 Spring 2003 1 Alamo Rental Car Company Note some of you have a slightly incorrect

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