CAS Exam 7 Spring 2012, Question 15
Study guide: Exam 9
Given the following auto liability claims information:
| Claim # | Case Incurred Indemnity ($) | Case Incurred ALAE ($) |
|---|---|---|
| 1 | 800 | 100 |
| 2 | 5,000 | 250 |
| 3 | 2,100 | 0 |
| 4 | 12,000 | 1,800 |
| 5 | 77,000 | 4,000 |
Part a (1 point)
Calculate the Pearson's correlation coefficient.
Part b (1.25 points)
Using a dependency measure other than Pearson's correlation coefficient, draw a conclusion with respect to the appropriateness of using Pearson's correlation coefficient for this set of claims information.
Part c (0.5 points)
Identify one similarity and one difference between Pearson's correlation coefficient and the dependency measure in b. above.
Answer this question and see the worked solution