Solution Found!
Let pn, n = 0, 1, 2, ... , be the probability that an automobile policyholder will file
Chapter 1, Problem 1.1-16(choose chapter or problem)
Let pn, 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 pn+1 = (1/4)pn. What is the probability that the holder will file two or more claims during this period?
Questions & Answers
QUESTION:
Let pn, 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 pn+1 = (1/4)pn. What is the probability that the holder will file two or more claims during this period?
ANSWER:Step 1 of 4
The values of and are obtained below:
From the information given, the actuary involved makes the assumption that
For ,
For ,
Similarly,