S490C F07 Quiz 2

# S490C F07 Quiz 2 - Stat 490C Quiz 2 1 Losses follow a...

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Stat 490C Quiz 2 September 13, 2007 1. Losses follow a Pareto distribution with α = 3 and θ = 200. A policy covers the loss except for a franchise deductible of 50. X is the random variable representing the amount paid by the insurance company per payment. Calculate the expected value of the X.

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2. Losses in 2007 are uniformly distributed between 0 and 100,000. An insurance policy pays for all claims in excess of an ordinary deductible of \$20,000. For 2008, claims will be subject to uniform inflation of 20%. The Company implements an upper limit u (without changing the deductible) so that the

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