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Short-Term Actuarial Math Old Exam C Forum

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  #11  
Old 09-11-2016, 02:04 PM
StayCoolKD StayCoolKD is offline
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I glad you asked.. cuz I dont get it too! thanks for the post!
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  #12  
Old 02-14-2018, 06:44 PM
ericp ericp is offline
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This should be a simple problem but Im not seeing intuitively why we add back the parts of the E(S-3) where S < 3 (at 0, 1, and 2).

I got the part about E(s-3) = E(S) - 3 but not the terms that are added back.
Of course E(s) - 3 is a negative number so something has to be added back but Im having a mental block on the terms that are added back.
f(0) = no claims with probability = e-2
f1 = one claim with probability = e-2*2
why is the f0 multiplied by 3 and f1 multiplied by 2 and f3 multiplied by 1 ?

Im just trying to see why this makes sense but something is throwing me off.
Can you help
Thanks.
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  #13  
Old 02-14-2018, 07:43 PM
ericp ericp is offline
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Nevermind. I think I got confused in the details. Just sticking to Ex - E(x-3) makes it easy to see. Just plug in the terms from there....
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