Actuarial Notes

Exam DISC-DA Practice Question 225

Study guide: Exam DISC-DA

A linear model for auto physical damage severity is fitted as

\hat{y} = 1{,}200 + 85\,x_1 - 40\,x_2

where x_1 is the vehicle's value in thousands of dollars and x_2 is the driver's years of experience. What is the predicted severity for a $20,000 vehicle driven by someone with 10 years of experience?

  • A) 1,300
  • B) 2,500
  • C) 2,900
  • D) 3,300

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