SOA Exam P Sample Question 289
Study guide: Exam P-1
An airport owner 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 200 up to a policy maximum of 500.
The following table shows a probability function for the random variable X of 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) 163.5
- B) 187.6
- C) 208.7
- D) 234.9
- E) 336.6
Answer this question and see the worked solution