SOA Exam P Sample Question 80
Study guide: Exam P-1
Let X denote the size of a surgical claim and let Y denote the size of the associated hospital claim. An actuary is using a model in which
E[X] = 5, \quad E[X^2] = 27.4, \quad E[Y] = 7, \quad E[Y^2] = 51.4, \quad Var(X+Y) = 8.
Let C_1 = X + Y denote the size of the combined claims before the application of a 20% surcharge on the hospital portion of the claim, and let C_2 denote the size of the combined claims after the application of that surcharge.
Calculate Cov(C_1, C_2).
- A) 8.80
- B) 9.60
- C) 9.76
- D) 11.52
- E) 12.32
Answer this question and see the worked solution