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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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