Exam P Practice Question 945
Study guide: Exam P-1
Aggregate insurance claims S follow a compound Poisson process. The Poisson claim count has mean \lambda and each individual claim size X has an exponential distribution with mean \beta. It is given that E[S] = 5000 and \text{Var}(S) = 50{,}000{,}000.
Calculate \lambda.
- A) 0.5
- B) 1
- C) 2
- D) 5
- E) 10
Answer this question and see the worked solution
Concepts tested
- Variance for Conditional and Marginal Distributions
- Poisson Distribution
- Exponential Distribution
- Compound Poisson Process