CAS Exam 8 Fall 2013, Question 6
Study guide: Exam 8
Given the following information:
| Amount of Loss | Probability of Loss |
|---|---|
| $0 | 80% |
| $100,000 | 15% |
| $500,000 | 5% |
- The basic limit is $200,000.
- The actuary selects 20% of the standard deviation as the risk load.
- Assume there are no expenses.
Calculate the risk-loaded increased limit factor for a policy limit of $400,000.
Part a (2 points)
Answer this question and see the worked solution