SOA Exam FAM Sample Question 32
Study guide: Exam FAM
The number of claims, N, made on an insurance portfolio follows the following distribution:
n |
\Pr(N = n) |
|---|---|
| 0 | 0.7 |
| 2 | 0.2 |
| 3 | 0.1 |
If a claim occurs, the benefit is 0 or 10 with probability 0.8 and 0.2, respectively.
The number of claims and the benefit for each claim are independent.
Calculate the probability that aggregate benefits will exceed expected benefits by more than 2 standard deviations.
- A) 0.02
- B) 0.05
- C) 0.07
- D) 0.09
- E) 0.12
Answer this question and see the worked solution