ASM Example 11A

[troyandabed]

How do you compute the second moment in Example 11A on pg. 218? I thought you just replace delta with 2*delta in the v using the rule of moments, but either I'm making a math mistake over and over or I'm overlooking something. Thanks.

First off, we are working with i, not delta. With constant q, we have convenient formulas for insurances. Namely, A(x)= q/(q+i).

This is analagous to mu/(mu + delta) for a continuous insurance. For continuous, second moments are calculate using twice the force of interest. For discrete, calculate using 2i + i^2.

[troyandabed]

Originally Posted by Justin.M

First off, we are working with i, not delta. With constant q, we have convenient formulas for insurances. Namely, A(x)= q/(q+i).

This is analagous to mu/(mu + delta) for a continuous insurance. For continuous, second moments are calculate using twice the force of interest. For discrete, calculate using 2i + i^2.

Can you elaborate on this point any more? Why can you just replace i with 2i + i^2?

For second moments:
i => 2i + i^2
d => 2d - d^2
v => v^2

These are properties that can be proven. For the sake of this exam, you should just memorize them.