SOA Exam P Sample Question 478
Study guide: Exam P-1
A company provides health insurance to employees located at four different plants. Health insurance costs at each plant are independent of those costs at any other plant. Plant managers have calculated the following statistics:
| Plant | Average Cost | Standard Deviation |
|---|---|---|
| 1 | 2 | 1 |
| 2 | 2 | 2 |
| 3 | 5 | 3 |
| 4 | 7 | 4 |
Calculate the standard deviation of the total company health insurance costs.
- A)
2.5 - B)
5.5 - C)
7.5 - D)
10.0 - E)
12.5
Answer this question and see the worked solution
Concepts tested
- Linear Combinations of Random Variables
- Variance and Standard Deviation
- Independent Random Variables