SOA Exam FAM Sample Question 4
Study guide: Exam FAM
You are given:
(i) Low-hazard risks have an exponential claim size distribution with mean \theta.
(ii) Medium-hazard risks have an exponential claim size distribution with mean 2\theta.
(iii) High-hazard risks have an exponential claim size distribution with mean 3\theta.
(iv) No claims from low-hazard risks are observed.
(v) Three claims from medium-hazard risks are observed, of sizes 1, 2 and 3.
(vi) One claim from a high-hazard risk is observed, of size 15.
Calculate the maximum likelihood estimate of \theta.
- A) 1
- B) 2
- C) 3
- D) 4
- E) 5
Answer this question and see the worked solution