CAS Exam 8 Fall 2013, Question 20
Study guide: Exam 9
The aggregate loss experience of an insurer's book of business is described by the following distribution function:
F(x) = x^{0.25} \quad \text{where } 0 \le x \le 1
Part a (1 point)
Derive an exposure curve from the above cumulative distribution function.
Part b (1 point)
Given that the maximum possible loss is $2,000,000, use the derived exposure curve in part a. above to determine the ratio of pure risk premium in the layer $1,000,000 excess of $500,000.
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