Exam MAS-I Practice Question 4

Study guide: Exam MAS-I

Let X be a non-negative ground-up loss with a continuous distribution and finite mean, and let u > 0 be a policy limit. Determine which of the following statements about the limited expected value E[X \wedge u] are true.

• I. E[X \wedge u] is no greater than u and no greater than E[X].

• II. Raising the limit from u to u + h, where h > 0, increases E[X \wedge u] by at most h \cdot \Pr(X > u).

• III. If every loss increases by 10% and the limit u is unchanged, E[X \wedge u] increases by exactly 10%.

• A) I only

• B) I and II only

• C) I and III only

• D) II and III only

• E) The answer is not given by (A), (B), (C), or (D)

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Concepts tested

• Limited Expected Value
• Policy Limit
• Inflation

More questions from this set

• Exam MAS-I Practice Question 3
• Exam MAS-I Practice Question 5