Unformatted text preview: 3 ] = 314 Determine the expected number of claims of size 2. (Ans 11) A compound Poisson distribution can be represented by the following sum: S= (1) N 1 + (2) N 2 + (3) N 3 . Suppose that λ = 20, p(1) = .7, p(2) = .2, and p(3) = .1. Compute f S (x) for x = 0, 1, 2, 3 by calculating the convolution of the distributions of (1) N 1 , (2) N 2 , and (3) N 3 , as in the “Alternative Method Calculations” on page 382. (Ans f S (0) = e20 , f S (1) = 14e20 , f S (2) = 102e20 , and f S (3) = 515.33e20 ) (5) Use the recursive method to verify your computations in problem (4)....
View
Full Document
 Spring '11
 CharlesDann
 Probability theory, 20%, 60%, onehour, $1.28

Click to edit the document details