SOA Exam FAM Sample Question 88
Study guide: Exam FAM
You are given:
(i) The random variable X has probability density function
f(x) = \alpha(1500)^{\alpha}(1500 + x)^{-(\alpha+1)}, \qquad \alpha > 0 \text{ and } x > 0
(ii) Five sample observations are:
50 \qquad 250 \qquad 450 \qquad 650 \qquad 850
Calculate the maximum likelihood estimate of \alpha.
- A) 0.16
- B) 0.79
- C) 1.85
- D) 2.91
- E) 3.97
Answer this question and see the worked solution