Exam MAS-I Practice Question 136
Study guide: Exam MAS-I
An actuary will model annual pure premium (incurred loss per policy-year, in dollars and cents) for 20,000 small commercial policies with a single GLM. Two histograms are drawn:
- Of all policies: one bar at exactly zero holds 91% of the policies; the rest are spread thinly over positive values out to several hundred thousand dollars.
- Of the positive values only, on a log scale: a single, roughly symmetric hump.
Which GLM specification has a response distribution most consistent with what the histograms show?
- A) Normal with an identity link
- B) Poisson with a log link
- C) Gamma with a log link
- D) Tweedie with power 1.5, log link
- E) Inverse Gaussian with a log link
Answer this question and see the worked solution