SOA Exam P Sample Question 311
Study guide: Exam P-1
Employees of a large company all choose one of three levels of health insurance coverage, for which premiums, denoted by X, are 1, 2, and 3, respectively. Premiums are subject to a discount, denoted by Y, of 0 for smokers and 1 for non-smokers. The joint probability function of X and Y is given by
p(x,y) = \begin{cases} \dfrac{x^2 + y^2}{31}, & \text{for } x = 1, 2, 3 \text{ and } y = 0, 1 \\ 0, & \text{otherwise.} \end{cases}Calculate the variance of X - Y, the total premium paid by a randomly chosen employee.
- A) 0.20
- B) 0.69
- C) 0.74
- D) 1.90
- E) 2.65
Answer this question and see the worked solution