CAS Exam MAS-I Spring 2018, Question 4

Study guide: Exam MAS-I

You are given the following information about flights on ABC Airlines:

• Flights are delayed at a Poisson rate of four per month.
• The number of passengers on each flight is independently distributed with mean of 100 and standard deviation of 50.
• Each passenger on a delayed flight is compensated with a payment of 200.

Calculate the standard deviation of the total annual compensation for delayed flights.

• A) Less than 100,000
• B) At least 100,000, but less than 125,000
• C) At least 125,000, but less than 150,000
• D) At least 150,000, but less than 175,000
• E) At least 175,000

Answer this question and see the worked solution

Concepts tested

• Aggregate Loss Model
• Poisson Distribution
• Variance
• Compound Poisson Process

More questions from this set

• CAS Exam MAS-I Spring 2018, Question 3
• CAS Exam MAS-I Spring 2018, Question 5