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Unformatted text preview: 1. (7 points) Bauer Blasting Company (BBC) self insures its employee life insurance. At the end of 2006, the life insurance fund has a surplus of 5,000. At the beginning of each calendar year, BBC contributes 20,000 into the life insurance fund. The fund earns interest at 4%. If a BBC employee dies on the job, BBC provides a death benefit of $10,000 per death at the end of the calendar year. The distribution of deaths each year is: Deaths Probability 1 0.2 2 0.5 3 0.3 Calculate the probability of ruin for the life insurance fund within 3 years. 2. (7 points) You are given the following sample of claims: X: 8, 9, 12, 12, 13, 13, 13, 15, 17, 21 The sum of X is 133 and the sum of X 2 is 1895. H is that μ x = 10.5 and H 1 is that μ x ≠ 10.5. Calculate the z statistic, the critical value(s) assuming a significance level of 1%, and the p value. State your conclusion with regard to the Hypothesis Testing. 3. Wang Warranty Corporation is testing iPods. Wang starts with 100 iPods and tests them by dropping them on the ground. Wang records the number of drops before each iPod will no longer play. The following data is collected from this test: Drops to Failure Failures Drops to Failure Failures 1 6 9 7 2 2 10 6 4 3 11 7 6 4 12 7 7 4 13 48 8 5 22 1 (3 points) Calculate the unbiased estimator of the mean of the true Drops to Failure distribution. 4. Wang Warranty Corporation is testing iPods. Wang starts with 100 iPods and tests them by dropping them on the ground. Wang records the number of drops...
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 Fall '11
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