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Assume that a driver faces the following loss distribution: Loss 10,000 0 Probability .04 .96 2....

Assume that a driver faces the following loss distribution:

Loss 10,000 0

Probability .04 .96

2. What is the expected loss?

3. What is the standard deviation of loss?

Now assume that this driver pools her losses with another driver facing the same loss distribution, and that the losses are not correlated.

4. What is the expected loss for each member of the pool?
5. What is the standard deviation of loss for each member of the pool?

Math   Statistics-And-Probability   
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