Question

An insurance company sells a house insurance policy that covers losses incurred by a policyholder. Losses...

An insurance company sells a house insurance policy that covers losses incurred by a policyholder. Losses incurred follow an exponential distribution with mean 3000. Calculate the 95th percentile of losses. (Round your answer to the whole number.) *

please show steps

Math   Statistics-And-Probability   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Probability Density Functionof Exponential Distribution with mean = 3000 is given by:

,

                  for x 0

      = 0,   for x < 0

95th Percentile is given by:

So, we get:

Taking logarithm on both sides, we get:

i.e.,

So,

So,

Answer is:

- 23865

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A homeowners insurance policy covers losses due to theft, with a deductible of 5. Theft losses...
A homeowners insurance policy covers losses due to theft, with a deductible of 5. Theft losses are uniformly distributed on [0, 20]. (a) Determine the moment generating function, M(t), for t /= 0, of the claim payment on a theft. (b) Compute the mean and variance of the claim payment on a theft. (c) Find the median and 90th percentile of the claim payment on a theft.
A homeowners insurance policy covers losses due to theft, with a deductible of 5. Theft losses...
A homeowners insurance policy covers losses due to theft, with a deductible of 5. Theft losses are uniformly distributed on [0, 20]. (a) Determine the moment generating function, M(t), for t not equal to 0, of the claim payment on a theft. (b) Compute the mean and variance of the claim payment on a theft. (c) Find the median and 90th percentile of the claim payment on a theft
Sandhill’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $104...
Sandhill’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $104 on January 2, 2020. In addition, Sandhill will receive an additional commission of $11 each year for as long as the policyholder does not cancel the policy. After selling the policy, Sandhill does not have any remaining performance obligations. Based on Sandhill’s significant experience with these types of policies, it estimates that policyholders on average renew the policy for 4.5 years, which results in...
Shamrock’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $114...
Shamrock’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $114 on January 2, 2020. In addition, Shamrock will receive an additional commission of $10 each year for as long as the policyholder does not cancel the policy. After selling the policy, Shamrock does not have any remaining performance obligations. Based on Shamrock’s significant experience with these types of policies, it estimates that policyholders on average renew the policy for 4.5 years, which results in...
The probability distribution for damage claims paid by the Newton Automobile Insurance Company on collision insurance...
The probability distribution for damage claims paid by the Newton Automobile Insurance Company on collision insurance follows. Payment ($) Probability 0 0.82 500 0.05 1000 0.04 3000 0.04 5000 0.03 8000 0.01 10000 0.01 a. Use the expected collision payment to determine the collision insurance premium that would enable the company to break even. Answer: $ b. The insurance company charges an annual rate of $595 for the collision coverage. What is the expected value of the collision policy for...
An insurance company sells a $12,000, five-year term life insurance policy to an individual for $640....
An insurance company sells a $12,000, five-year term life insurance policy to an individual for $640. Find the expected return for the company if the probability the individual will live for the next five years is 0.98. (Round your answer to the nearest cent.)
You own a house that costs $200,000 to build. You buy a $15,000 insurance policy to...
You own a house that costs $200,000 to build. You buy a $15,000 insurance policy to compensate you for damage to the house. The deductible is $25,000. (if your house suffers $4,000 damage from a storm, you pay for all the repairs yourself. if the house suffers $45,000, in damage, you pay $25,000 and the insurance company pays the remaining $20,000.) to which trader type the insurance company belong? explain your answer. a. call buyer b. call seller c. put...
Claims arrive to an insurance company according to a Poisson Process. The average number of claims...
Claims arrive to an insurance company according to a Poisson Process. The average number of claims reported each year is 120. Claim severities are independent and follow an Exponential distribution with an average of 160 TL. What is the expected value of total amount of claim severities in a month? ONLY ANSWER PLEASE QUICKKK
An insurance policy sells for ​$1200. Based on past​ data, an average of 1 in 100...
An insurance policy sells for ​$1200. Based on past​ data, an average of 1 in 100 policyholders will file a ​$20,000 ​claim, an average of 1 in 200 policyholders will file a ​$50,000 ​claim, and an average of 1 in 500 policyholders will file an ​$80,000 claim. Find the expected value​ (to the​ company) per policy sold. If the company sells 20,000 ​policies, what is the expected profit or​ loss? The expected value is $_________? (simplify your answer) The expected...
The idea of insurance is that we all face risks that are unlikely but carry high...
The idea of insurance is that we all face risks that are unlikely but carry high cost. Think of a fire destroying your home. So we form a group to share the risk: we all pay a small amount, and the insurance policy pays a large amount to those few of us whose homes burn down. An insurance company looks at the records for millions of homeowners and sees that the mean loss from fire in a year is μ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT