Exam MAS-I Practice Question 164
Study guide: Exam MAS-I
An analyst fits claim frequency as a step function of driver age X with cutpoints 30, 50 and 70. She creates all four indicators
C_0 = I(X < 30), \quad C_1 = I(30 \le X < 50), \quad C_2 = I(50 \le X < 70), \quad C_3 = I(70 \le X)and enters all four, together with an intercept, in a least-squares fit. The data include 214 drivers aged 70 or older. The software reports:
| Term | Estimate |
|---|---|
| (Intercept) | 0.140 |
C_0 |
0.085 |
C_1 |
0.020 |
C_2 |
-0.030 |
C_3 |
NA |
Calculate the predicted claim frequency for a 24-year-old driver.
- A) 0.055
- B) 0.085
- C) 0.140
- D) 0.160
- E) 0.225
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