SOA Exam P Sample Question 310
Study guide: Exam P-1
An insurer offers policies for which insured loss amounts follow a distribution with density function
f(x) = \begin{cases} \dfrac{x}{50}, & \text{for } 0 < x < 10 \\ 0, & \text{otherwise.} \end{cases}Customers may choose one of two policies. Policy 1 has no deductible and a limit of 4, while Policy 2 has a deductible of 4 and no limit.
Given the occurrence of an insured loss, calculate the absolute value of the difference between the insurer's expected claim payments under Policies 1 and 2.
- A) 0.32
- B) 0.64
- C) 0.79
- D) 0.91
- E) 1.12
Answer this question and see the worked solution