CAS Exam MAS-I Spring 2018, Question 15
Study guide: Exam MAS-I
You are given the following information:
- Loss severity follows an exponential distribution with mean of
\theta. - Any loss over 10,000 will result in a claim payment of only 10,000 due to policy limits. Otherwise claims are paid in full.
- You observe the following four claim payments:
1{,}000 \qquad 3{,}100 \qquad 7{,}500 \qquad 10{,}000
Calculate the maximum likelihood estimate of \theta.
- A) Less than 5,000
- B) At least 5,000, but less than 6,000
- C) At least 6,000, but less than 7,000
- D) At least 7,000, but less than 8,000
- E) At least 8,000
Answer this question and see the worked solution