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 Short-Term Actuarial Math Old Exam C Forum

#11
09-11-2016, 03:04 PM
 StayCoolKD Member CAS Join Date: Sep 2014 College: Alumni University of Washington Posts: 272

I glad you asked.. cuz I dont get it too! thanks for the post!
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VEE 1/P 2/FM 3/MFE S (LC/ST) 4/C
#12
02-14-2018, 07:44 PM
 ericp Member Join Date: Aug 2007 Posts: 283

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.
#13
02-14-2018, 08:43 PM
 ericp Member Join Date: Aug 2007 Posts: 283

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....