SOA Exam FAM Sample Question 14
Study guide: Exam FAM
A health plan implements an incentive to physicians to control hospitalization under which the physicians will be paid a bonus B equal to c times the amount by which total hospital claims are under 400 (0 \le c \le 1).
The effect the incentive plan will have on underlying hospital claims is modeled by assuming that the new total hospital claims will follow a Pareto distribution with \alpha = 2 and \theta = 300.
E(B) = 100
Calculate c.
- A) 0.44
- B) 0.48
- C) 0.52
- D) 0.56
- E) 0.60
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