Question

Actuarial Science

A loss has an exponential distribution with mean 2. A deductible of 1 is imposed. Find the PF of payment.

Answer 1

Answer:-

given That:-

A loss has an exponential distribution with mean 2. A deductible of 1 is imposed.

Find the PF of payment.?

To find the PF of payment

The proper interpretation involves a conditional probability

Let us assume the value of 'x' Such that the conditional probability that the loss is atmost 'x'

Where 'x' denote the loss.

Since 'x' is exponentially distributed with mean 2

we have So, for

given deductible = 1

  

To find PF of payment :

applying logarithm