On a single premium contract the present value of the, Ask an Expert

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On a single premium contract, the present value of the benefits takes the value 0 with probability 0.94, 1 with probability 0.01 and 3 with probability 0.05.

(a) Find the percentile premium for α = 0.95.

(b) Suppose the insurer plans to sell 2 contracts. Find the smallest possible premium for each, such that there is a probability of at least 0.95 that the total premiums will cover the total benefits on both contracts.

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Statistics and Probability, Statistics

Category:- Statistics and Probability
Reference No.:- M91710511

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