SOA Exam FAM Sample Question 86
Study guide: Exam FAM
For a product liability policy, you are given:
(i) The following statistics for products X and Y
| Product X | Product Y | ||
|---|---|---|---|
| Number of Claims | Mean | 10 | 2 |
| Standard Deviation | 3 | 1 | |
| Loss Amount | Mean | 20 | 50 |
| Standard Deviation | 5 | 10 |
(ii) Loss amounts and claim numbers are independent within and between products.
(iii) Aggregate losses, for both products combined, approximately follow the normal distribution.
Determine the probability that aggregate losses for both products combined exceed 400.
- A) Less than 0.10
- B) At least 0.10, but less than 0.15
- C) At least 0.15, but less than 0.20
- D) At least 0.20, but less than 0.25
- E) At least 0.25
Answer this question and see the worked solution