Actuarial Outpost
 
Go Back   Actuarial Outpost > Exams - Please Limit Discussion to Exam-Related Topics > SoA/CAS Preliminary Exams > Short-Term Actuarial Math
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

Browse Open Actuarial Jobs

Life  Health  Casualty  Pension  Entry Level  All Jobs  Salaries


Short-Term Actuarial Math Old Exam C Forum

Reply
 
Thread Tools Search this Thread Display Modes
  #1  
Old 01-25-2018, 04:02 PM
Bash Bash is offline
Member
SOA
 
Join Date: Jun 2010
Posts: 62
Default MLE estimators

This question is from Adapt C Review:
Maximum Likelihood Estimators - Example 1
You are given:
i. Policy A has a policy limit of 200. It was observed to have the following losses: 35 60 130 200+ 200+
ii. Policy B has a deductible of 50 and a policy limit of 300. It was observed to have the following losses: 55 70 150 300+
You are to fit the loss distribution with the maximum likelihood estimation.
Construct the likelihood function.

My question is this:
In (ii) we are given a deductible of 50 and a policy limit of 300. For the likelihood function, it is my understanding that, for 300+, the function is S(u)/S(d) where u is the "maximum covered loss" and not the "policy limit". Why don't we add the deductible to the policy limit to get the maximum covered loss, rather the policy limit is used?
__________________
P FM MFE C MLC
VEE: Statistics Corporate Finance Economics
Reply With Quote
  #2  
Old 01-25-2018, 04:29 PM
Academic Actuary Academic Actuary is offline
Member
 
Join Date: Sep 2009
Posts: 8,264
Default

I think it has to do with ambiguity of the term policy limit, where in this case it means max covered loss. If it meant max benefit payable you would know the amount of loss if it was between 300 and 350.
Reply With Quote
  #3  
Old 01-25-2018, 05:22 PM
Vorian Atreides's Avatar
Vorian Atreides Vorian Atreides is offline
Wiki/Note Contributor
CAS
 
Join Date: Apr 2005
Location: As far as 3 cups of sugar will take you
Studying for ACAS
College: Hard Knocks
Favorite beer: Most German dark lagers
Posts: 62,815
Default

Note that in some cases, you apply the policy limit (call it L) before applying the deductible (d); giving a maximum covered loss of u = L - d.
__________________
I find your lack of faith disturbing

Why should I worry about dying? Itís not going to happen in my lifetime!


Freedom of speech is not a license to discourtesy

#BLACKMATTERLIVES
Reply With Quote
  #4  
Old 01-25-2018, 07:46 PM
Jim Daniel's Avatar
Jim Daniel Jim Daniel is offline
Member
SOA
 
Join Date: Jan 2002
Location: Davis, CA
College: Wabash College B.A. 1962, Stanford Ph.D. 1965
Posts: 2,688
Default

Quote:
Originally Posted by Academic Actuary View Post
I think it has to do with ambiguity of the term policy limit, where in this case it means max covered loss. If it meant max benefit payable you would know the amount of loss if it was between 300 and 350.
The official textbook defines policy limit to be the maximum possible payment. Although at least one old exam question meant something else by the term, so far as the official text is concerned there is no ambiguity.
__________________
Jim Daniel
Jim Daniel's Actuarial Seminars
www.actuarialseminars.com
jimdaniel@actuarialseminars.com
Reply With Quote
  #5  
Old 08-22-2018, 08:59 PM
T-roy's Avatar
T-roy T-roy is offline
Member
SOA
 
Join Date: May 2002
College: UW Whitewater
Favorite beer: FFF GBH/NG Moon Man
Posts: 8,768
Blog Entries: 1
Default

I named my dog MLE (Emily)
__________________
Quote:
Originally Posted by ORLYLOL View Post
Beer is ****ing amazing
Reply With Quote
  #6  
Old 09-18-2018, 10:06 PM
SweepingRocks SweepingRocks is offline
Member
SOA
 
Join Date: Jun 2017
College: Bentley University
Posts: 57
Default

Quote:
Originally Posted by T-roy View Post
I named my dog MLE (Emily)
This is a good thread.
__________________
FM P MFE Sat for STAM in October [Confident]

Former Disney World Cast Member, currently no idea what I'm doing
Reply With Quote
  #7  
Old 09-20-2018, 09:32 AM
rgreenlee's Avatar
rgreenlee rgreenlee is offline
Member
Non-Actuary
 
Join Date: Jun 2014
Location: in a van down by the river
College: you have never heard of it
Favorite beer: chocolate milk
Posts: 1,045
Default

Maximum Likelihood Estimator Estimators
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 02:45 PM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.19728 seconds with 11 queries