SOA Exam P Sample Question 650
Study guide: Exam P-1
A policyholder experiences two sports injuries this year, each resulting in three possible outcomes: no hospital stay, a short hospital stay, or a long hospital stay. Each short hospital stay results in a loss of 2. Each long hospital stay results in a loss of 20.
The joint probability function for i short hospital stays and j long hospital stays is
p(i, j) = \begin{cases}
\dfrac{2!}{i!\,j!\,(2 - i - j)!}(0.2)^i(0.1)^j(0.7)^{2-i-j}, & \text{for } 0 \le i + j \le 2 \\[6pt]
0, & \text{otherwise.}
\end{cases}Calculate the policyholder's expected total loss from hospital stays due to sports injuries.
- A)
0.60 - B)
1.00 - C)
1.44 - D)
3.92 - E)
4.80
Answer this question and see the worked solution