SOA Exam P Sample Question 37
Study guide: Exam P-1
A company prices its hurricane insurance using the following assumptions:
- (i) In any calendar year, there can be at most one hurricane.
- (ii) In any calendar year, the probability of a hurricane is 0.05.
- (iii) The numbers of hurricanes in different calendar years are mutually independent.
Using the company's assumptions, calculate the probability that there are fewer than 3 hurricanes in a 20-year period.
- A) 0.06
- B) 0.19
- C) 0.38
- D) 0.62
- E) 0.92
Answer this question and see the worked solution