edu-mc-exam-c-0507 - *BEGINNING OF EXAMINATION 1 For a...

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Exam C: Spring 2007 - 1 - GO ON TO NEXT PAGE **BEGINNING OF EXAMINATION** 1. For a dental policy, you are given: (i) Ground-up losses follow an exponential distribution with mean θ . (ii) Losses under 50 are not reported to the insurer. (iii) For each loss over 50, there is a deductible of 50 and a policy limit of 350. (iv) A random sample of five claim payments for this policy is: 50 150 200 350 + 350 + where + indicates that the original loss exceeds 400. Determine the likelihood function ( ) L θ . (A) 1100 5 1 e θ θ (B) 1300 5 1 e θ θ (C) 1350 5 1 e θ θ (D) 1100 3 1 e θ θ (E) 1350 3 1 e θ θ
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