Answered: You are given: (i)Losses on an…

Calculus For The Life Sciences

2nd Edition

ISBN:9780321964038

Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.

Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.

Chapter2: Exponential, Logarithmic, And Trigonometric Functions

Section2.CR: Chapter 2 Review

Problem 111CR: Respiratory Rate Researchers have found that the 95 th percentile the value at which 95% of the data...

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You are given:
(i)Losses on an insurance coverage follow a lognormal distribution with parameters μ = θ and σ = 2.
(ii) θ varies by policy holder in accordance with a normal distribution with mean 5 and variance 3.
(iii) A policyholder submits 20 claims for losses. The average size of the claims is 10,000.
Calculate the Buhlmann prediction of the size of the next loss for this policyholder.

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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