Let pn, n = 0, 1, 2, . . . , be the probability that an

Chapter 1, Problem 16E

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QUESTION:

Let \(p_{n}\), n = 0, 1, 2, . . . , be the probability that an automobile policyholder will file for n claims in a five-year period. The actuary involved makes the assumption that \(p_{n+1}=(1 / 4) p_{n}\). What is the probability that the holder will file two or more claims during this period?

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QUESTION:

Let \(p_{n}\), n = 0, 1, 2, . . . , be the probability that an automobile policyholder will file for n claims in a five-year period. The actuary involved makes the assumption that \(p_{n+1}=(1 / 4) p_{n}\). What is the probability that the holder will file two or more claims during this period?

ANSWER:

Step 1 of 5

Let \(p_{n}\), n = 0, 1, 2, . . . , be the probability that an automobile policyholder will file for n claim in a five-year period.

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