Question

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

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