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  #1  
Old 10-22-2006, 02:17 PM
frisbbzepp frisbbzepp is offline
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Default ASM practice exam 1 #19

A city purchasesa snow cleaning contract for a winter season. The contract pays the cost of cleaning the snow, subject to an aggregate deductible of 30 for the season. You are given:
(i) The number of snowstorms is binomial with m=10, q=0.3
(ii) The cost of cleaning for each snowstorm has the following distribution:

Pr Amount
0.4 10
0.3 20
0.3 35

Determine the expected aggregate reimbursement the city receives during a season.

I wanted to calculate using the recursive formula. I got that
,
,
, and
.

Then I wanted to do , and so on. I'm not getting the answer that the book is getting (I think I need to find . Can anyone point out my error or maybe spell out the solution using this method? Thanks.

(As an aside, does anyone know how to type combinations using MimeTex? I tried \binom but that didn't work.)
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Old 10-22-2006, 03:56 PM
Abraham Weishaus Abraham Weishaus is offline
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Default

Please see the errata list; this one is already there.
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