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cooi
02-12-2009, 07:40 AM
Here's a question from ASM Lesson 42:
You want number of claims for a group to be within 5% of expected 90% of the time. How many claims must you observe to give full credibility to the experience?
The solution says the answer should be (1.645/.05)^2=1082.41.

My question is: Shouldn't we use 1.282 instead of 1.645 since N(1.282)=.9? Can someone please explain to me why should we use 1.645?

Abraham Weishaus
02-12-2009, 08:15 AM
Because the interval is 2-sided. There is a 5% probability of being too high, 5% of being too low. That adds up to 90% of being within the interval.

Sophie H.
02-12-2009, 11:44 AM
Here's a question from ASM Lesson 42:
You want number of claims for a group to be within 5% of expected 90% of the time. How many claims must you observe to give full credibility to the experience?
The solution says the answer should be (1.645/.05)^2=1082.41.

My question is: Shouldn't we use 1.282 instead of 1.645 since N(1.282)=.9? Can someone please explain to me why should we use 1.645?

haha, I got the same problem yesterday on 31.10 and 31.17.
95% uses 1.96 and not 1.645.

cooi
02-12-2009, 07:40 PM
Thank you Dr. Weishaus and Sophie H..