CAS Exam MAS-I Fall 2018, Question 20
Study guide: Exam MAS-I
X_i is the severity of claim i, which has an exponential distribution with mean = \theta.
The payment for the claim under an insurance policy is capped at u.
There are (n + s) total claims, with \{x_1, x_2, \ldots, x_n\} claims with payment less than u, and s claims with payment capped at u.
Determine which of the following is the MLE for \theta.
- A)
\dfrac{1}{n}\sum_{i=1}^{n} x_i + \dfrac{u}{s} - B)
\dfrac{1}{n}\sum_{i=1}^{n} x_i + \dfrac{nu}{s} - C)
\dfrac{1}{n}\sum_{i=1}^{n} x_i + \dfrac{u}{n} - D)
\dfrac{1}{n}\sum_{i=1}^{n} x_i + \dfrac{su}{n} - E) None of (A), (B), (C), or (D) are correct
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