Exam P Practice Question 3
Study guide: Exam P-1
An insurer covers a portfolio of policies, each with a deductible of 1,000. Loss amounts are independent and uniformly distributed on the interval (0, 5{,}000). A loss of 1,000 or less produces no payment.
The insurer's claims department expects to make 160 claim payments next year, that is, 160 losses that exceed the deductible.
Calculate the insurer's expected total claim payments next year.
- A) 204,800
- B) 240,000
- C) 256,000
- D) 320,000
- E) 400,000
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