Sketch the probability distribution for average losses in a pooling arrangement for: The expected loss for...
- Sketch the probability distribution for average losses in a
pooling arrangement for:
- The expected loss for each participant is $1,500, and losses for the 100 participants are independent
-
- The expected loss for each participant is $1,500, and losses for the 100 participants are positively correlated
Homework Answers
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Sketch the probability distribution for average losses in a
pooling arrangement for:
The expected loss for...
2. The number of losses on an automobile comprehensive coverage has the following distribution: Number of losses Probability 0.3 0.4 0.2 0.1 2 Loss sizes follow a Pareto distribution with paramet...
2. The number of losses on an automobile comprehensive coverage has the following distribution: Number of losses Probability 0.3 0.4 0.2 0.1 2 Loss sizes follow a Pareto distribution with parameters a -5 and 0 1240 and are independent of loss counts and each other. Calculate the variance of aggregate losses.
2. The number of losses on an automobile comprehensive coverage has the following distribution: Number of losses Probability 0.3 0.4 0.2 0.1 2 Loss sizes follow a Pareto distribution...
Losses follow an exponential distribution with mean 1. Two independent losses are observed. Calculate the expected...
Losses follow an exponential distribution with mean 1. Two independent losses are observed. Calculate the expected value of the smaller loss.
Stacey and Tracey have the same loss distribution: Loss = $0 with probability .6 Loss =...
Stacey and Tracey have the same loss distribution: Loss = $0 with probability .6 Loss = $20 with probability .4 Find the expected loss and standard deviation for the distribution
Problem 2 Suppose that each 100 risk-neutral person faces a risk of $10,000 loss with probability...
Problem 2 Suppose that each 100 risk-neutral person faces a risk of $10,000 loss with probability 0.01. The risks are independent, so the probability that any person incurs a loss does not affect others' probability. Each has an initial investment of $40,000. (a) Calculate the expected loss that each person faces. (b) Calculate the expected wealth without insurance. (c) Suppose each of the 100 individual purchases $1 into mutual insurance. The loss is fully covered with insurance Calculate the expected...
Remember, the expected value of a probability distribution is a statistical measure of the average (mean)...
Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible circumstances. To compute an asset's expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence Consider the following case: James owns a two-stock portfolio that invests in Falcon Freight Company (FF) and Pheasant Pharmaceuticals (PP). Three-quarters of James's...
Remember, the expected value of a probability distribution is a statistical measure of the average (mean)...
Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible circumstances. To compute an asset's expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence. Consider the following case: Joshua owns a two-stock portfolio that invests in Falcon Freight Company (FF) and Pheasant Pharmaceuticals (PP). Three-quarters of Joshua's...
please show calculations as well, thank you! Florida State Brewing determines that its liability losses have...
please show calculations as well, thank you!
Florida State Brewing determines that its liability losses have the following distribution: Probability 0.02 0.08 0.10 Loss 5,000 $ 3,500 $ 2,000 500 0.15 0.65 $ 0 1. Graph/Sketch the probability distribution. 2. What is the expected value of the liability losses? 3. What is the variance and standard deviation of the liability losses? 4. Explain why variance and standard deviation are useful measures of risk. 5. Using your graph from part A,...
Losses have a uniform distribution from 0 to 250. An insurance pays 100% of the amount...
Losses have a uniform distribution from 0 to 250. An insurance pays 100% of the amount of a loss in excess of an ordinary deductible of 23. The maximum payment is 210 per loss. Determine the expected payment, given that a payment has been made.
Suppose Go Green Insurance Company insures 25 risks, each with a 4% probability of loss. The...
Suppose Go Green Insurance Company insures 25 risks, each with a 4% probability of loss. The probabilities of loss are independent. On average, how often would 4 or more risks have losses in the same year? (a) Once in 13 years (b) Once in 17 years (c) Once in 39 years (d) Once in 60 years (e) Once in 72 years
The average loss associated to fire damage is µ = 500 $ per house and the...
The average loss associated to fire damage is µ = 500 $ per house and the standard deviation for the loss is σ = 10 000 $. The distribution of the losses is largely asymetrical towards the right. Supposing that the insurance company sells insurance policies for 600$. If the company sells 50 000 polices, what's the approximative probability that the average loss in a year is greater than 600$?
2. The number of losses on an automobile comprehensive coverage has the following distribution: Number of losses Probability 0.3 0.4 0.2 0.1 2 Loss sizes follow a Pareto distribution with parameters a -5 and 0 1240 and are independent of loss counts and each other. Calculate the variance of aggregate losses.
2. The number of losses on an automobile comprehensive coverage has the following distribution: Number of losses Probability 0.3 0.4 0.2 0.1 2 Loss sizes follow a Pareto distribution...
Problem 2 Suppose that each 100 risk-neutral person faces a risk of $10,000 loss with probability 0.01. The risks are independent, so the probability that any person incurs a loss does not affect others' probability. Each has an initial investment of $40,000. (a) Calculate the expected loss that each person faces. (b) Calculate the expected wealth without insurance. (c) Suppose each of the 100 individual purchases $1 into mutual insurance. The loss is fully covered with insurance Calculate the expected...
Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible circumstances. To compute an asset's expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence Consider the following case: James owns a two-stock portfolio that invests in Falcon Freight Company (FF) and Pheasant Pharmaceuticals (PP). Three-quarters of James's...
Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible circumstances. To compute an asset's expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence. Consider the following case: Joshua owns a two-stock portfolio that invests in Falcon Freight Company (FF) and Pheasant Pharmaceuticals (PP). Three-quarters of Joshua's...
please show calculations as well, thank you!
Florida State Brewing determines that its liability losses have the following distribution: Probability 0.02 0.08 0.10 Loss 5,000 $ 3,500 $ 2,000 500 0.15 0.65 $ 0 1. Graph/Sketch the probability distribution. 2. What is the expected value of the liability losses? 3. What is the variance and standard deviation of the liability losses? 4. Explain why variance and standard deviation are useful measures of risk. 5. Using your graph from part A,...
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