Thanks Gandalf. These continuous ones seem easy to me, the descrete ones I always mess up! What a noob, it helps if you just break the question into two parts. You can just set the survival function equal to .5 and solve for t. (60t)/60 The reason you do this is because you're trying to find the value of v^t where there is a 50% chance of getting a value lower than this. You know that the pv of an insurance payment is monotomically decreasing as time increases, so just find the time that the survival function is .5 Once you've identify what an increasing time value is doing to the present value of your random variable then just forget about the v^t part untill you've already solved for t in the survival function. Think of them seperately. With percentiles first work out the probability part, find a time, then go back to the present value part with the value you got from the probability function. At least that's what I do.
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FM Oct 2013, P Jan 2014, MLC Apr 2014, MFE July 2014, C October 2014
VEE
