Question

Extra #1 : The Insurance Company classifies its auto drivers as Preferred (State 1) or Standard (State 2) at time 0, which is the start of the first year the driver is insured. After issue, drivers are continuously reclassified. For a driver, Bill, you are given: (i) x] denotes Bill's age at time 0. (ii) For k 0,1,.2 P0.6-0.le +4 = 0.4 + 0.1c" 0.5-0.4e -0.5+0.4e Bill is a preferred driver when the policy is issued. Calculate: The probability that Bill is a preferred driver at the start of year 4. The probability that Bill is a preferred driver at the start of year 4 and has never been a standard driver between time 0 and time 3. The probability the Bill is a preferred driver at the start of year 4 and was a standard driver at the start of either year 2 or year 3 (or both). a) b) c)

Answer 1