Exam MAS-I Practice Question 2
Study guide: Exam MAS-I
Claims on a commercial auto book occur as a Poisson process at a rate of 0.06 claims per vehicle-year, independently across vehicles. Next year the book grows from 5,000 to 10,000 vehicle-years, and the rate per vehicle-year does not change.
Let F be the observed claim frequency for a year: the number of claims divided by the vehicle-years. Compared with this year, how do the mean and the variance of F change next year?
- A) The mean doubles and the variance doubles
- B) The mean doubles and the variance is unchanged
- C) The mean is unchanged and the variance doubles
- D) The mean is unchanged and the variance is unchanged
- E) The mean is unchanged and the variance halves
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