Exam MAS-I Practice Question 134
Study guide: Exam MAS-I
An actuary plots driver age for 50,000 auto policies before building a claim frequency model. The histogram (5-year bins) shows a single smooth hump from age 16 to about 85, peaking in the 40s, with almost nothing between 85 and 95. Then there is a separate bar at exactly age 99 holding 1,100 policies. A further 40 policies have driver age 0. The quartiles of driver age are Q_1 = 34 and Q_3 = 56.
Determine which of the following statements are true.
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I. The 1,100 policies at age 99 should be investigated as a possible default code for a missing age before any model is fitted.
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II. Because the histogram from 16 to 85 is a single smooth hump, driver age can enter the frequency model as a linear term.
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III. A box plot with fences at 1.5 × IQR beyond the box would flag both the age-0 and the age-99 records as outliers, but would not show that 1,100 records share one value.
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A) I only
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B) I and II only
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C) I and III only
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D) II and III only
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E) The answer is not given by (A), (B), (C), or (D)
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