SOA Exam P Sample Question 118
Study guide: Exam P-1
An airport purchases an insurance policy to offset costs associated with excessive amounts of snowfall. For every full ten inches of snow in excess of 40 inches during the winter season, the insurer pays the airport 300 up to a policy maximum of 700.
The following table shows the probability function for the random variable X of annual (winter season) snowfall, in inches, at the airport.
| Inches | [0,20) | [20,30) | [30,40) | [40,50) | [50,60) | [60,70) | [70,80) | [80,90) | [90,\infty) |
|---|---|---|---|---|---|---|---|---|---|
| Probability | 0.06 | 0.18 | 0.26 | 0.22 | 0.14 | 0.06 | 0.04 | 0.04 | 0.00 |
Calculate the standard deviation of the amount paid under the policy.
- A) 134
- B) 235
- C) 271
- D) 313
- E) 352
Answer this question and see the worked solution