SOA Exam P Sample Question 88
Study guide: Exam P-1
The cumulative distribution function for health care costs experienced by a policyholder is modeled by the function
F(x) = \begin{cases} 1 - e^{-\frac{x}{100}}, & x > 0 \\ 0, & \text{otherwise.} \end{cases}
The policy has a deductible of 20. An insurer reimburses the policyholder for 100% of health care costs between 20 and 120. Health care costs above 120 are reimbursed at 50%.
Let G be the cumulative distribution function of reimbursements given that the reimbursement is positive.
Calculate G(115).
- A) 0.683
- B) 0.727
- C) 0.741
- D) 0.757
- E) 0.777
Answer this question and see the worked solution