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Old 04-21-2005, 02:27 PM
MortalityMan MortalityMan is offline
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Join Date: Oct 2004
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Default sampel exam #141 E[Y^2] weird whoa

question...

A claim severity distribution is exponential with mean 1000. An insurance company will
pay the amount of each claim in excess of a deductible of 100.
Calculate the variance of the amount paid by the insurance company for one claim,
including the possibility that the amount paid is 0.


________________
Ok I get that E[y] = 1000*pr(x>100).

I dont get why E[y^2] = 1000^2 * 2 * pr(x>100)
where's the 2 coming from? something i should know i'm sure....
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