SOA Exam P Sample Question 413
Study guide: Exam P-1
An auditor is examining insurance policies for fraud. A policyholder can only file one claim. The probability of any given policy having a claim is 0.90, and the probability of a claim being fraudulent is 0.20. The auditor picks five policies at random and examines them in order until he finds two fraudulent claims. He then stops examining policies. If he doesn't find two fraudulent claims, he stops after examining the fifth policy.
Calculate the expected number of policies he will examine.
- A)
4.68 - B)
4.73 - C)
4.78 - D)
4.83 - E)
4.88
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