Read SOA/CAS Exam P Sample Solutions text version
SOCIETY OF ACTUARIES/CASUALTY ACTUARIAL SOCIETY
EXAM P PROBABILITY
EXAM P SAMPLE SOLUTIONS
Copyright 2005 by the Society of Actuaries and the Casualty Actuarial Society
Some of the questions in this study note are taken from past SOA/CAS examinations.
P0905
PRINTED IN U.S.A.
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1. Solution: D Let
G = event that a viewer watched gymnastics B = event that a viewer watched baseball
S = event that a viewer watched soccer Then we want to find c Pr ( G B S ) = 1  Pr ( G B S )
= 1  Pr ( G ) + Pr ( B ) + Pr ( S )  Pr ( G B )  Pr ( G S )  Pr ( B S ) + Pr ( G B S ) = 1  ( 0.28 + 0.29 + 0.19  0.14  0.10  0.12 + 0.08 ) = 1  0.48 = 0.52
2. Solution: A Let R = event of referral to a specialist L = event of lab work We want to find P[RL] = P[R] + P[L] P[RL] = P[R] + P[L] 1 + P[~(RL)] = P[R] + P[L] 1 + P[~R~L] = 0.30 + 0.40 1 + 0.35 = 0.05 .
3. Solution: D First note P [ A B ] = P [ A] + P [ B ]  P [ A B ]
P [ A B '] = P [ A] + P [ B ']  P [ A B '] Then add these two equations to get P [ A B ] + P [ A B '] = 2 P [ A] + ( P [ B ] + P [ B '] )  ( P [ A B ] + P [ A B '] ) 1.6 = 2 P [ A] + 1  P [ A]
P [ A] = 0.6
0.7 + 0.9 = 2 P [ A] + 1  P ( A B ) ( A B ')
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4.
Solution: A For i = 1, 2, let Ri = event that a red ball is drawn form urn i
Bi = event that a blue ball is drawn from urn i .
Then if x is the number of blue balls in urn 2, 0.44 = Pr[( R1 R2 ) ( B1 B2 )] = Pr[ R1 R2 ] + Pr [ B1 B2 ] = Pr [ R1 ] Pr [ R2 ] + Pr [ B1 ] Pr [ B2 ] = Therefore, 32 3x 3x + 32 + = x + 16 x + 16 x + 16 2.2 x + 35.2 = 3x + 32 0.8 x = 3.2 x=4 2.2 = 5. Solution: D Let N(C) denote the number of policyholders in classification C . Then N(Young Female Single) = N(Young Female) N(Young Female Married) = N(Young) N(Young Male) [N(Young Married) N(Young Married Male)] = 3000 1320 (1400 600) = 880 . 4 16 6 x + 10 x + 16 10 x + 16
6. Solution: B Let H = event that a death is due to heart disease F = event that at least one parent suffered from heart disease Then based on the medical records, 210  102 108 = P H F c = 937 937 937  312 625 P F c = = 937 937 c P H F 108 625 108 = = = 0.173 and P H  F c = c 937 937 625 P F
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7.
Solution: D Let A = event that a policyholder has an auto policy H = event that a policyholder has a homeowners policy Then based on the information given, Pr ( A H ) = 0.15
Pr ( A H c ) = Pr ( A )  Pr ( A H ) = 0.65  0.15 = 0.50 Pr ( Ac H ) = Pr ( H )  Pr ( A H ) = 0.50  0.15 = 0.35
and the portion of policyholders that will renew at least one policy is given by 0.4 Pr ( A H c ) + 0.6 Pr ( Ac H ) + 0.8 Pr ( A H ) = ( 0.4 )( 0.5 ) + ( 0.6 )( 0.35 ) + ( 0.8 )( 0.15 ) = 0.53
( = 53% )
100292 01B9 8. Solution: D Let C = event that patient visits a chiropractor T = event that patient visits a physical therapist We are given that Pr [C ] = Pr [T ] + 0.14 Pr ( C T ) = 0.22 Pr ( C c T c ) = 0.12 Therefore, 0.88 = 1  Pr C c T c = Pr [C T ] = Pr [C ] + Pr [T ]  Pr [C T ] = Pr [T ] + 0.14 + Pr [T ]  0.22 = 2 Pr [T ]  0.08 or
Pr [T ] = ( 0.88 + 0.08 ) 2 = 0.48
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9.
Solution: B Let M = event that customer insures more than one car S = event that customer insures a sports car Then applying DeMorgan's Law, we may compute the desired probability as follows: c Pr ( M c S c ) = Pr ( M S ) = 1  Pr ( M S ) = 1  Pr ( M ) + Pr ( S )  Pr ( M S ) = 1  Pr ( M )  Pr ( S ) + Pr ( S M ) Pr ( M ) = 1  0.70  0.20 + ( 0.15 )( 0.70 ) = 0.205
10. Solution: C Consider the following events about a randomly selected auto insurance customer: A = customer insures more than one car B = customer insures a sports car We want to find the probability of the complement of A intersecting the complement of B (exactly one car, nonsports). But P ( Ac Bc) = 1 P (A B) And, by the Additive Law, P ( A B ) = P ( A) + P ( B ) P ( A B ). By the Multiplicative Law, P ( A B ) = P ( B  A ) P (A) = 0.15 * 0.64 = 0.096 It follows that P ( A B ) = 0.64 + 0.20 0.096 = 0.744 and P (Ac Bc ) = 0.744 = 0.256
11. Solution: B Let C = Event that a policyholder buys collision coverage D = Event that a policyholder buys disability coverage Then we are given that P[C] = 2P[D] and P[C D] = 0.15 . By the independence of C and D, it therefore follows that 0.15 = P[C D] = P[C] P[D] = 2P[D] P[D] = 2(P[D])2 (P[D])2 = 0.15/2 = 0.075 P[D] = 0.075 and P[C] = 2P[D] = 2 0.075 Now the independence of C and D also implies the independence of CC and DC . As a result, we see that P[CC DC] = P[CC] P[DC] = (1 P[C]) (1 P[D]) = (1 2 0.075 ) (1 0.075 ) = 0.33 .
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12.
Solution: E "Boxed" numbers in the table below were computed. High BP Low BP Norm BP
Total
Regular heartbeat 0.09 0.20 0.56 0.85 Irregular heartbeat 0.05 0.02 0.08 0.15 Total 0.14 0.22 0.64 1.00 From the table, we can see that 20% of patients have a regular heartbeat and low blood pressure. 13. Solution: C The Venn diagram below summarizes the unconditional probabilities described in the problem.
In addition, we are told that P[ A B C] 1 x = P [ A B C  A B] = = P [ A B] x + 0.12 3 It follows that 1 1 x = ( x + 0.12 ) = x + 0.04 3 3 2 x = 0.04 3 x = 0.06 Now we want to find c P ( A B C ) c P ( A B C )  Ac = c P A 1 P[ A B C] = 1  P [ A]
= = 1  3 ( 0.10 )  3 ( 0.12 )  0.06 1  0.10  2 ( 0.12 )  0.06 0.28 = 0.467 0.60
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14.
Solution: A 1 11 1 1 1 1 pk  2 = pk 3 = ... = p0 pk = pk 1 = 5 55 5 5 5 5
k
k
k 0
p 5 1 pk = p0 = 0 = p0 k =0 5 1 4 k =0 1 5 p0 = 4/5 . Therefore, P[N > 1] = 1 P[N 1] = 1 (4/5 + 4/5 1/5) = 1 24/25 = 1/25 = 0.04 .
1=
15. Solution: C A Venn diagram for this situation looks like:
We want to find w = 1  ( x + y + z )
1 1 5 We have x + y = , x + z = , y + z = 4 3 12 Adding these three equations gives 1 1 5 ( x + y) + ( x + z) + ( y + z) = + + 4 3 12 2( x + y + z) = 1
x+ y+ z = 1 2
1 1 = 2 2 Alternatively the three equations can be solved to give x = 1/12, y = 1/6, z =1/4 1 1 1 1 again leading to w = 1  + + = 12 6 4 2 w = 1 ( x + y + z ) = 1
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16.
Solution: D Let N1 and N 2 denote the number of claims during weeks one and two, respectively. Then since N1 and N 2 are independent,
Pr [ N1 + N 2 = 7 ] = n =0 Pr [ N1 = n ] Pr [ N 2 = 7  n ]
7 7 1 1 = n =0 n +1 8 n 2 2 1 7 = n=0 9 2 8 1 1 = 9 = 6 = 2 2 64
17. Solution: D Let O = Event of operating room charges E = Event of emergency room charges Then 0.85 = Pr ( O E ) = Pr ( O ) + Pr ( E )  Pr ( O E ) Since
So
( Independence ) Pr ( E c ) = 0.25 = 1  Pr ( E ) , it follows Pr ( E ) = 0.75 . 0.85 = Pr ( O ) + 0.75  Pr ( O )( 0.75 ) Pr ( O )(1  0.75 ) = 0.10 Pr ( O ) = 0.40
= Pr ( O ) + Pr ( E )  Pr ( O ) Pr ( E )
18. Solution: D Let X1 and X2 denote the measurement errors of the less and more accurate instruments, respectively. If N(µ,) denotes a normal random variable with mean µ and standard deviation , then we are given X1 is N(0, 0.0056h), X2 is N(0, 0.0044h) and X1, X2 are X1 + X 2 0.00562 h 2 + 0.00442 h 2 is N (0, ) = N(0, 2 4 0.00356h) . Therefore, P[0.005h Y 0.005h] = P[Y 0.005h] P[Y 0.005h] = P[Y 0.005h] P[Y 0.005h] 0.005h = 2P[Y 0.005h] 1 = 2P Z  1 = 2P[Z 1.4] 1 = 2(0.9192) 1 = 0.84. 0.00356h independent. It follows that Y =
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19.
Solution: B Apply Bayes' Formula. Let A = Event of an accident B1 = Event the driver's age is in the range 1620 B2 = Event the driver's age is in the range 2130 B3 = Event the driver's age is in the range 3065 B4 = Event the driver's age is in the range 6699 Then Pr ( A B1 ) Pr ( B1 ) Pr ( B1 A ) = Pr ( A B1 ) Pr ( B1 ) + Pr ( A B2 ) Pr ( B2 ) + Pr ( A B3 ) Pr ( B3 ) + Pr ( A B4 ) Pr ( B4 ) =
( 0.06 )( 0.08 ) = 0.1584 ( 0.06 )( 0.08) + ( 0.03)( 0.15) + ( 0.02 )( 0.49 ) + ( 0.04 )( 0.28)

20.
Solution: D Let S = Event of a standard policy F = Event of a preferred policy U = Event of an ultrapreferred policy D = Event that a policyholder dies Then P [ D  U ] P [U ] P [U  D ] = P [ D  S ] P [ S ] + P [ D  F ] P [ F ] + P [ D  U ] P [U ]
=
( 0.001)( 0.10 ) ( 0.01)( 0.50 ) + ( 0.005 )( 0.40 ) + ( 0.001)( 0.10 )
= 0.0141 21. Solution: B Apply Baye's Formula: Pr Seri. Surv.
= =
( 0.9 )( 0.3) = 0.29 ( 0.6 )( 0.1) + ( 0.9 )( 0.3) + ( 0.99 )( 0.6 )
Pr Surv. Crit. Pr [ Crit.] + Pr Surv. Seri. Pr [Seri.] + Pr Surv. Stab. Pr [Stab.]
Pr Surv. Seri. Pr [Seri.]
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22.
Solution: D Let H = Event of a heavy smoker L = Event of a light smoker N = Event of a nonsmoker D = Event of a death within fiveyear period
1 Now we are given that Pr D L = 2 Pr D N and Pr D L = Pr D H 2 Therefore, upon applying Bayes' Formula, we find that Pr D H Pr [ H ] Pr H D = Pr D N Pr N + Pr D L Pr L + Pr D H Pr H [ ] [ ] [ ] 2 Pr D L ( 0.2 ) 0.4 = = = 0.42 1 0.25 + 0.3 + 0.4 Pr D L ( 0.5 ) + Pr D L ( 0.3) + 2 Pr D L ( 0.2 ) 2 23. Solution: D Let C = Event of a collision T = Event of a teen driver Y = Event of a young adult driver M = Event of a midlife driver S = Event of a senior driver Then using Bayes' Theorem, we see that P[C Y ]P[Y ] P[YC] = P[C T ]P[T ] + P[C Y ]P[Y ] + P[C M ]P[ M ] + P[C S ]P[ S ] = (0.08)(0.16) = 0.22 . (0.15)(0.08) + (0.08)(0.16) + (0.04)(0.45) + (0.05)(0.31)
24. Solution: B Observe
Pr [1 N 4] 1 1 1 1 1 1 1 1 1 Pr N 1 N 4 = = + + + + + + + Pr [ N 4] 6 12 20 30 2 6 12 20 30 = 10 + 5 + 3 + 2 20 2 = = 30 + 10 + 5 + 3 + 2 50 5
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25.
Solution: B Let Y = positive test result D = disease is present (and ~D = not D) Using Baye's theorem: P[Y  D]P[ D] (0.95)(0.01) = = 0.657 . P[DY] = P[Y  D]P[ D] + P[Y ~ D]P[~ D] (0.95)(0.01) + (0.005)(0.99)
26. Solution: C Let: S = Event of a smoker C = Event of a circulation problem Then we are given that P[C] = 0.25 and P[SC] = 2 P[SCC] Now applying Bayes' Theorem, we find that P[CS] = 2 P[ S C C ]P[C ] 2 P[ S C ]P[C ] + P[ S C ](1  P[C ])
C C
P[ S C ]P[C ] P[ S C ]P[C ] + P[ S C C ]( P[C C ])
=
=
2(0.25) 2 2 = = . 2(0.25) + 0.75 2 + 3 5
27. Solution: D Use Baye's Theorem with A = the event of an accident in one of the years 1997, 1998 or 1999. P[ A 1997]P[1997] P[1997A] = P[ A 1997][ P[1997] + P[ A 1998]P[1998] + P[ A 1999]P[1999] = (0.05)(0.16) = 0.45 . (0.05)(0.16) + (0.02)(0.18) + (0.03)(0.20)

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28.
Solution: A Let C = Event that shipment came from Company X I1 = Event that one of the vaccine vials tested is ineffective P [ I1  C ] P [ C ] Then by Bayes' Formula, P [ C  I1 ] = P [ I1  C ] P [ C ] + P I1  C c P C c Now 1 P [C ] = 5 1 4 P C c = 1  P [ C ] = 1  = 5 5
30 P [ I1  C ] = ( 1 ) ( 0.10 )( 0.90 ) = 0.141 29 29 30 P I1  C c = ( 1 ) ( 0.02 )( 0.98 ) = 0.334
Therefore, P [ C  I1 ] =
( 0.141)(1/ 5) = 0.096 ( 0.141)(1/ 5) + ( 0.334 )( 4 / 5)
29. Solution: C Let T denote the number of days that elapse before a highrisk driver is involved in an accident. Then T is exponentially distributed with unknown parameter . Now we are given that
50
0.3 = P[T 50] =
e
0
 t
dt = e  t
50 0
= 1 e50
Therefore, e50 = 0.7 or =  (1/50) ln(0.7)
80
It follows that P[T 80] = =1e
(80/50) ln(0.7)
e
0
 t
dt = e  t
80 0
= 1 e80
= 1 (0.7)80/50 = 0.435 .
30. Solution: D e 2 e 4 =3 = 3 P[N Let N be the number of claims filed. We are given P[N = 2] = 2! 4! = 4]24 2 = 6 4 2 = 4 = 2 Therefore, Var[N] = = 2 .
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31.
Solution: D Let X denote the number of employees that achieve the high performance level. Then X follows a binomial distribution with parameters n = 20 and p = 0.02 . Now we want to determine x such that Pr [ X > x ] 0.01
or, equivalently, x k 20  k 0.99 Pr [ X x ] = k =0 ( 20 ) ( 0.02 ) ( 0.98 ) k The following table summarizes the selection process for x: x Pr [ X = x ] Pr [ X x ] 0 1 2
( 0.98) = 0.668 19 20 ( 0.02 )( 0.98 ) = 0.272 2 18 190 ( 0.02 ) ( 0.98 ) = 0.053
20
0.668 0.940 0.993
Consequently, there is less than a 1% chance that more than two employees will achieve the high performance level. We conclude that we should choose the payment amount C such that 2C = 120, 000 or C = 60, 000 32. Solution: D Let X = number of lowrisk drivers insured Y = number of moderaterisk drivers insured Z = number of highrisk drivers insured f(x, y, z) = probability function of X, Y, and Z Then f is a trinomial probability function, so Pr [ z x + 2] = f ( 0, 0, 4 ) + f (1, 0,3) + f ( 0,1,3) + f ( 0, 2, 2 )
= ( 0.20 ) + 4 ( 0.50 )( 0.20 ) + 4 ( 0.30 )( 0.20 ) +
4 3 3
4! 2 2 ( 0.30 ) ( 0.20 ) 2!2!
= 0.0488
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33.
Solution: B Note that 1 0.005 ( 20  t ) dt = 0.005 20t  t 2 20 x x 2 1 1 = 0.005 400  200  20 x + x 2 = 0.005 200  20 x + x 2 2 2 where 0 < x < 20 . Therefore, 2 Pr [ X > 16] 200  20 (16 ) + 1 2 (16 ) 8 1 = = Pr X > 16 X > 8 = Pr X > 8 = 1 ( 8)2 72 9 [ ] 200  20 (8) + 2 Pr [ X > x ] =
20
34. Solution: C 2 We know the density has the form C (10 + x ) for 0 < x < 40 (equals zero otherwise). First, determine the proportionality constant C from the condition
1 = C (10 + x ) dx =  C (10 + x) 1
40 2 0 40
40 0
f ( x)dx =1 :
C C 2  = C 0 10 50 25 so C = 25 2 , or 12.5 . Then, calculate the probability over the interval (0, 6): 6 2 1 6 1 1 =  (12.5 ) = 0.47 . 12.5 (10 + x ) dx =  (10 + x ) 0 0 10 16 =
35. Solution: C Let the random variable T be the future lifetime of a 30yearold. We know that the density of T has the form f (x) = C(10 + x)2 for 0 < x < 40 (and it is equal to zero otherwise). First, determine the proportionality constant C from the condition 40 0 f ( x)dx =1: 40 2 40 1 = f ( x)dx =  C (10 + x) 1 0 = C 0 25 25 = 12.5. Then, calculate P(T < 5) by integrating f (x) = 12.5 (10 + x)2 so that C = 2 over the interval (0.5).
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36.
Solution: B To determine k, note that 1 k k 4 5 1 = k (1  y ) dy =  (1  y ) 1 = 0 5 5 0 k=5 We next need to find P[V > 10,000] = P[100,000 Y > 10,000] = P[Y > 0.1] =
0.1
5 (1  y ) dy =  (1  y )
4
1
5 1 0.1
= (0.9)5 = 0.59 and P[V > 40,000]
= P[100,000 Y > 40,000] = P[Y > 0.4] =
0.4
5 (1  y ) dy =  (1  y )
4
1
5 1 0.4
= (0.6)5 = 0.078 .
It now follows that P[V > 40,000V > 10,000] P[V > 40, 000 V > 10, 000] P[V > 40, 000] 0.078 = = = 0.132 . = P[V > 10, 000] P[V > 10, 000] 0.590 37. Solution: D Let T denote printer lifetime. Then f(t) = ½ et/2, 0 t Note that 1 1 P[T 1] = e  t / 2 dt = e t / 2 1 = 1 e1/2 = 0.393 0 2 0 P[1 T 2] =
2e
1
2
1
t / 2
dt = e t / 2
2 1
= e 1/2  e 1 = 0.239
Next, denote refunds for the 100 printers sold by independent and identically distributed random variables Y1, . . . , Y100 where with probability 0.393 200 Yi = 100 with probability 0.239 i = 1, . . . , 100 0 with probability 0.368 Now E[Yi] = 200(0.393) + 100(0.239) = 102.56 Therefore, Expected Refunds =
E [Y ] = 100(102.56) = 10,256 .
i =1 i
100
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38.
Solution: A Let F denote the distribution function of f. Then
F ( x ) = Pr [ X x ] = 3t 4 dt = t 3 = 1  x 3
x x 1 1
Using this result, we see
Pr [ X < 2 X 1.5] =
Pr ( X < 2 ) ( X 1.5 ) Pr [ X 1.5]
3
=
Pr [ X < 2]  Pr [ X 1.5] Pr [ X 1.5]
3 3
F ( 2 )  F (1.5 ) (1.5 )  ( 2 ) = = 3 1  F (1.5 ) (1.5 )
3 = 1 4
= 0.578
39. Solution: E Let X be the number of hurricanes over the 20year period. The conditions of the problem give x is a binomial distribution with n = 20 and p = 0.05 . It follows that P[X < 2] = (0.95)20(0.05)0 + 20(0.95)19(0.05) + 190(0.95)18(0.05)2 = 0.358 + 0.377 + 0.189 = 0.925 .
40. Solution: B Denote the insurance payment by the random variable Y. Then if 0 < X C 0 Y = X  C if C < X < 1 Now we are given that 0.64 = Pr (Y < 0.5 ) = Pr ( 0 < X < 0.5 + C ) = Therefore, solving for C, we find C = ±0.8  0.5 Finally, since 0 < C < 1 , we conclude that C = 0.3
0.5+ C 0
2 x dx = x 2
0.5 + C 0
= ( 0.5 + C )
2
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41.
Solution: E Let X = number of group 1 participants that complete the study. Y = number of group 2 participants that complete the study. Now we are given that X and Y are independent. Therefore, P ( X 9 ) ( Y < 9 ) ( X < 9 ) ( Y 9 )
{
}
= P ( X 9 ) ( Y < 9 ) + P ( X < 9 ) ( Y 9 ) = 2 P ( X 9 ) ( Y < 9 ) = 2 P [ X 9 ] P [Y < 9 ] = 2 P [ X 9] P [ X < 9] = 2 P [ X 9] (1  P [ X 9] )
9 10 9 10 = 2 ( 10 ) ( 0.2 )( 0.8 ) + ( 10 ) ( 0.8 ) 1  ( 10 ) ( 0.2 )( 0.8 )  ( 10 ) ( 0.8 ) 10 9 10 9 = 2 [ 0.376][1  0.376] = 0.469
(due to symmetry)
(again due to symmetry)
42. Solution: D Let IA = Event that Company A makes a claim IB = Event that Company B makes a claim XA = Expense paid to Company A if claims are made XB = Expense paid to Company B if claims are made Then we want to find C Pr I A I B ( I A I B ) ( X A < X B )
{
}
C = Pr I A I B + Pr ( I A I B ) ( X A < X B ) C = Pr I A Pr [ I B ] + Pr [ I A ] Pr [ I B ] Pr [ X A < X B ]
(independence)
= ( 0.60 )( 0.30 ) + ( 0.40 )( 0.30 ) Pr [ X B  X A 0] = 0.18 + 0.12 Pr [ X B  X A 0] Now X B  X A is a linear combination of independent normal random variables. Therefore, X B  X A is also a normal random variable with mean M = E [ X B  X A ] = E [ X B ]  E [ X A ] = 9, 000  10, 000 = 1, 000 and standard deviation = Var ( X B ) + Var ( X A ) = It follows that
( 2000 ) + ( 2000 )
2
2
= 2000 2
Page 17 of 54
1000 Pr [ X B  X A 0] = Pr Z 2000 2 1 = Pr Z 2 2 1 = 1  Pr Z < 2 2 = 1  Pr [ Z < 0.354] = 1  0.638 = 0.362
(Z is standard normal)
Finally,
C Pr I A I B ( I A I B ) ( X A < X B ) = 0.18 + ( 0.12 )( 0.362 ) = 0.223
{
}
43. Solution: D If a month with one or more accidents is regarded as success and k = the number of failures before the fourth success, then k follows a negative binomial distribution and the requested probability is 4 k 3 3+ k 3 2 Pr [ k 4] = 1  Pr [ k 3] = 1  ( k ) 5 5 k =0 3 = 1 5
4
3 2 0 4 2 1 5 2 2 6 2 3 ( 0 ) + ( 1 ) + ( 2 ) + ( 3 ) 5 5 5 5
3 8 8 32 = 1  1 + + + 5 5 5 25 = 0.2898 Alternatively the solution is 2 4 2 3 5 2 3 6 2 3 + ( 1 ) + ( 2 ) + ( 3 ) = 0.2898 5 5 5 5 5 5 5 which can be derived directly or by regarding the problem as a negative binomial distribution with i) success taken as a month with no accidents ii) k = the number of failures before the fourth success, and iii) calculating Pr [ k 3]
4 4 4 2 4 3
4
Page 18 of 54
44.
Solution: C If k is the number of days of hospitalization, then the insurance payment g(k) is 100k for k =1, 2, 3 g(k) = 300 + 50 (k  3) for k = 4, 5.
{
5
Thus, the expected payment is
g (k ) p
k =1
k
= 100 p1 + 200 p2 + 300 p3 + 350 p4 + 400 p5
= (100 x5 + 200 x 4 + 300 x3 + 350 x 2 + 400 x1) = 1 (100 + 200 × 2 + 300 × 3 + 350 × 4 + 400 × 5) = 220 15 45. Solution: D
2 4 x x2 x3 x3 8 64 56 28 dx =  + = + = = Note that E ( X ) =  dx +  2 10 0 10 30 2 30 0 30 30 30 15 0 0 4
46. Solution: D The density function of T is 1 f ( t ) = et / 3 , 0 < t < 3 Therefore, E [ X ] = E max ( T , 2 ) =
2 0 t 2 t / 3 e dt + e  t / 3 dt 2 3 3
2 = 2e  t / 3  0 te  t / 3  + e t / 3 dt 2 2
= 2e
2 / 3
+ 2 + 2e
2 / 3
 3e t / 3  2
= 2 + 3e 2 / 3
Page 19 of 54
47.
Solution: D Let T be the time from purchase until failure of the equipment. We are given that T is exponentially distributed with parameter = 10 since 10 = E[T] = . Next define the payment for 0 T 1 x x for 1 < T 3 P under the insurance contract by P = 2 for T > 3 0 We want to find x such that 1 x t/10 1000 = E[P] = e dt + 10 0
1/10 3/10
x 1 t/10  t /10 2 10 e dt =  xe 1
1/10
3
1
0
x  e t /10 2
3 1
+ x (x/2) e + (x/2) e = x e We conclude that x = 5644 .
= x(1 ½ e
1/10
½ e3/10) = 0.1772x .
48. Solution: E Let X and Y denote the year the device fails and the benefit amount, respectively. Then the density function of X is given by x 1 f ( x ) = ( 0.6 ) ( 0.4 ) , x = 1, 2,3... and 1000 ( 5  x ) if x = 1, 2,3, 4 y= if x > 4 0 It follows that 2 3 E [Y ] = 4000 ( 0.4 ) + 3000 ( 0.6 )( 0.4 ) + 2000 ( 0.6 ) ( 0.4 ) + 1000 ( 0.6 ) ( 0.4 ) = 2694 49. Solution: D Define f ( X ) to be hospitalization payments made by the insurance policy. Then 100 X f (X ) = 300 + 25 ( X  3) and if X = 1, 2,3 if X = 4,5
Page 20 of 54
E f ( X ) = f ( k ) Pr [ X = k ]
k =1
5
5 4 3 2 1 = 100 + 200 + 300 + 325 + 350 15 15 15 15 15 1 640 = [100 + 160 + 180 + 130 + 70] = = 213.33 3 3
50. Solution: C Let N be the number of major snowstorms per year, and let P be the amount paid to (3 / 2) n e 3/ 2 , n = 0, 1, 2, . . . and the company under the policy. Then Pr[N = n] = n! for N = 0 0 . P= 10, 000( N  1) for N 1 Now observe that E[P] = = 10,000 e3/2 +
10, 000(n  1)
n =1
(3 / 2) n e 3/ 2 n!
(3 / 2) n e 3/ 2 = 10,000 e3/2 + E[10,000 (N 1)] n! n=0 3/2 = 10,000 e + E[10,000N] E[10,000] = 10,000 e3/2 + 10,000 (3/2) 10,000 = 7,231 .
10, 000(n  1)
51. Solution: C Let Y denote the manufacturer's retained annual losses. for 0.6 < x 2 x Then Y = for x > 2 2 and E[Y] = = 
2 2.5(0.6) 2.5 2.5(0.6) 2.5 2.5(0.6) 2.5 2(0.6) 2.5 x dx + 2 dx = dx  x3.5 x 3.5 x 2.5 x 2.5 0.6 2 0.6 2 2 0.6 2
2.5(0.6) 2.5 1.5 x1.5
+
2(0.6) 2.5 2.5(0.6) 2.5 2.5(0.6) 2.5 (0.6) 2.5 = + + 1.5 = 0.9343 . (2) 2.5 1.5(2)1.5 1.5(0.6)1.5 2
Page 21 of 54
52.
Solution: A Let us first determine K. Observe that 1 1 1 1 60 + 30 + 20 + 15 + 12 137 1 = K 1 + + + + = K = K 60 2 3 4 5 60 60 K= 137 It then follows that Pr [ N = n ] = Pr N = n Insured Suffers a Loss Pr [ Insured Suffers a Loss ] 60 3 , N = 1,...,5 ( 0.05) = 137 N 137 N Now because of the deductible of 2, the net annual premium P = E [ X ] where = 0 X = N  2 Then, P = E [ X ] = N =3 ( N  2 )
5
, if N 2 , if N > 2 3 3 3 1 = (1) + 3 = 0.0314 + 2 137 N 137 137 ( 4 ) 137 ( 5 )
53. Solution: D for 1 < y 10 y Let W denote claim payments. Then W = for y 10 10 10 2 2 2 10 10 It follows that E[W] = y 3 dy + 10 3 dy =   2 = 2 2/10 + 1/10 = 1.9 . y y y1 y 10 1 10
Page 22 of 54
54.
Solution: B Let Y denote the claim payment made by the insurance company. Then with probability 0.94 0 Y = Max ( 0, x  1) with probability 0.04 14 with probability 0.02 and
E [Y ] = ( 0.94 )( 0 ) + ( 0.04 )( 0.5003)
15 1
( x  1) e x / 2 dx + ( 0.02 )(14 )
15 15 = ( 0.020012 ) xe  x / 2 dx  e x / 2 dx + 0.28 1 1 15 15 15 = 0.28 + ( 0.020012 ) 2 xe  x / 2  1 +2 e  x / 2 dx  e x / 2 dx 1 1 15 = 0.28 + ( 0.020012 ) 30e 7.5 + 2e 0.5 + e x / 2 dx 1 7.5 0.5  x / 2 15 = 0.28 + ( 0.020012 ) 30e + 2e  2e  1
= 0.28 + ( 0.020012 ) ( 30e 7.5 + 2e 0.5  2e7.5 + 2e0.5 ) = 0.28 + ( 0.020012 ) ( 32e 7.5 + 4e 0.5 ) = 0.28 + ( 0.020012 )( 2.408 ) (in thousands) = 0.328 It follows that the expected claim payment is 328 . 55. Solution: C The pdf of x is given by f(x) = 1= k k 1 (1 + x)4 dx =  3 (1 + x)3 0 k=3
0
k , 0 < x < . To find k, note (1 + x) 4
=
k 3
It then follows that E[x] =
(1 + x)
0
3x
4
dx and substituting u = 1 + x, du = dx, we see
u 2 u 3 3(u  1) 1 1 du = 3 (u 3  u 4 )du = 3 E[x] =  = 3 2  3 = 3/2 1 = ½ . 4 u 2 3 1 1 1
Page 23 of 54
56.
Solution: C Let Y represent the payment made to the policyholder for a loss subject to a deductible D. for 0 X D 0 That is Y = x  D for D < X 1 Then since E[X] = 500, we want to choose D so that 1000 1 1 1 ( x  D) 2 1000 (1000  D) 2 500 = ( x  D)dx = = D 4 1000 1000 2 2000 D (1000 D)2 = 2000/4 500 = 5002 1000 D = ± 500 D = 500 (or D = 1500 which is extraneous).
57. Solution: B We are given that Mx(t) = 1 for the claim size X in a certain class of accidents. (1  2500t ) 4 (4)(2500) 10, 000 = First, compute Mx(t) = 5 (1  2500t ) (1  2500t )5 (10, 000)(5)(2500) 125, 000, 000 = Mx(t) = (1  2500t )6 (1  2500t )6 Then E[X] = Mx (0) = 10,000 E[X2] = Mx (0) = 125,000,000 Var[X] = E[X2] {E[X]}2 = 125,000,000 (10,000)2 = 25,000,000 Var[ X ] = 5,000 .
58. Solution: E Let XJ, XK, and XL represent annual losses for cities J, K, and L, respectively. Then X = XJ + XK + XL and due to independence x +x +x t M(t) = E e xt = E e( J K L ) = E e xJ t E e xK t E e xLt = MJ(t) MK(t) ML(t) = (1 2t)3 (1 2t)2.5 (1 2t)4.5 = (1 2t)10 Therefore, M(t) = 20(1 2t)11 M(t) = 440(1 2t)12 M(t) = 10,560(1 2t)13 E[X3] = M(0) = 10,560
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59.
Solution: B The distribution function of X is given by 2.5 ( 200 ) F ( x) = 200 t 3.5
x
2.5
 ( 200 ) dt = t 2.5
2.5 x
( 200 ) = 1
x 2.5
2.5
,
x > 200
200
Therefore, the p percentile x p of X is given by
th
( 200 ) p = F ( xp ) = 1 2.5 100 xp ( 200 ) 1  0.01 p =
xp
2.5 2.5
2.5
(1  0.01 p )
xp =
25
=
200 xp
25
200
(1  0.01 p )
It follows that x 70  x 30 =
200
( 0.30 )
25

200
( 0.70 )
25
= 93.06
60. Solution: E Let X and Y denote the annual cost of maintaining and repairing a car before and after the 20% tax, respectively. Then Y = 1.2X and Var[Y] = Var[1.2X] = (1.2)2 Var[X] = (1.2)2(260) = 374 .
61. Solution: A The first quartile, Q1, is found by ¾ =
Q1 = 200 (4/3)0.4 = 224.4 . Similarly, the third quartile, Q3, is given by Q3 = 200 (4)0.4 = 348.2 . The interquartile range is the difference Q3 Q1 .
z
Q1
f(x) dx . That is, ¾ = (200/Q1)2.5 or
Page 25 of 54
62.
Solution: C First note that the density function of X is given by 1 if x =1 2 1< x < 2 f ( x ) = x  1 if otherwise 0 Then
2 2 1 1 1 1 1 E ( X ) = + x ( x  1) dx = + x 2  x dx = + x3  x 2 1 1 2 2 2 3 2 1
(
)
2
=
E X
1 8 4 1 1 7 4 +   + = 1 = 2 3 2 3 2 3 3
( )
2
2 2 1 1 1 1 1 = + x 2 ( x  1) dx = + x 3  x 2 dx = + x 4  x3 2 1 2 1 2 4 3 1
(
)
2
=
1 16 8 1 1 17 7 23 +   + =  = 2 4 3 4 3 4 3 12
Var ( X ) = E X
( )
2
23 4 23 16 5  E ( X ) = 12  3 = 12  9 = 36
2
2
63. Solution: C X if 0 X 4 Note Y = 4 if 4 < X 5 Therefore, 41 54 1 4 4 E [Y ] = xdx + dx = x 2  0 + x 5 4 0 5 4 5 10 5 16 20 16 8 4 12 = +  = + = 10 5 5 5 5 5 41 5 16 1 16 4 E Y 2 = x 2 dx + dx = x 3  0 + x 5 4 05 4 5 15 5 64 80 64 64 16 64 48 112 = +  = + = + = 15 5 5 15 5 15 15 15
2 112 12  = 1.71 Var [Y ] = E Y 2  ( E [Y ] ) = 15 5 2
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64.
Solution: A Let X denote claim size. Then E[X] = [20(0.15) + 30(0.10) + 40(0.05) + 50(0.20) + 60(0.10) + 70(0.10) + 80(0.30)] = (3 + 3 + 2 + 10 + 6 + 7 + 24) = 55 E[X2] = 400(0.15) + 900(0.10) + 1600(0.05) + 2500(0.20) + 3600(0.10) + 4900(0.10) + 6400(0.30) = 60 + 90 + 80 + 500 + 360 + 490 + 1920 = 3500 Var[X] = E[X2] (E[X])2 = 3500 3025 = 475 and Var[ X ] = 21.79 . Now the range of claims within one standard deviation of the mean is given by [55.00 21.79, 55.00 + 21.79] = [33.21, 76.79] Therefore, the proportion of claims within one standard deviation is 0.05 + 0.20 + 0.10 + 0.10 = 0.45 .
65. Solution: B Let X and Y denote repair cost and insurance payment, respectively, in the event the auto is damaged. Then if x 250 0 Y = x  250 if x > 250 and 1500 1 1 12502 2 E [Y ] = x  250 )dx = x  250 ) 1500 = = 521 ( ( 250 250 1500 3000 3000 1500 1 1 12503 2 3 E Y 2 = = 434, 028 ( x  250 ) dx = ( x  250 ) 1500 = 250 250 1500 4500 4500
Var [Y ] = E Y 2  { E [Y ]} = 434, 028  ( 521)
2 2
Var [Y ] = 403
66. Solution: E Let X1, X2, X3, and X4 denote the four independent bids with common distribution function F. Then if we define Y = max (X1, X2, X3, X4), the distribution function G of Y is given by G ( y ) = Pr [Y y ]
= Pr ( X 1 y ) ( X 2 y ) ( X 3 y ) ( X 4 y ) = Pr [ X 1 y ] Pr [ X 2 y ] Pr [ X 3 y ] Pr [ X 4 y ] = F ( y ) =
4
1 3 5 4 y (1 + sin y ) , 16 2 2 It then follows that the density function g of Y is given by
Page 27 of 54
g ( y ) = G '( y ) = = 1 3 (1 + sin y ) ( cos y ) 4 4 cos y (1 + sin y )
5/ 2
3
,
3 5 y 2 2
Finally, E [Y ] = =
3/ 2 5/ 2
yg ( y ) dy
4
3/ 2
ycos y (1 + sin y ) dy
3
67. Solution: B The amount of money the insurance company will have to pay is defined by the random variable 1000 x if x < 2 Y = if x 2 2000 where x is a Poisson random variable with mean 0.6 . The probability function for X is k e 0.6 ( 0.6 ) p ( x) = k = 0,1, 2,3 and k! k 0.6 0.6 0.6 E [Y ] = 0 + 1000 ( 0.6 ) e + 2000e k = 2 k! k 0.6 = 1000 ( 0.6 ) e 0.6 + 2000 e 0.6 k =0  e0.6  ( 0.6 ) e0.6 k! = 2000e = 573 E Y 2 = (1000 ) ( 0.6 ) e 0.6 + ( 2000 ) e 0.6 k = 2
2 2
0.6
k =0
( 0.6 )
k!
k
 2000e 0.6  1000 ( 0.6 )e0.6 = 2000  2000e 0.6  600e0.6 0.6k k!
= ( 2000 ) e 0.6 k =0
2
= ( 2000 )
2
0.6k 2 2 2  ( 2000 ) e 0.6  ( 2000 )  (1000 ) ( 0.6 ) e 0.6 k! 2 2 2  ( 2000 ) e 0.6  ( 2000 )  (1000 ) ( 0.6 ) e 0.6
2 2
= 816,893 Var [Y ] = E Y 2  { E [Y ]} = 816,893  ( 573) = 488,564 Var [Y ] = 699
Page 28 of 54
68.
Solution: C Note that X has an exponential distribution. Therefore, c = 0.004 . Now let Y denote the for x < 250 x claim benefits paid. Then Y = and we want to find m such that 0.50 for x 250 250 = 0.004e 0.004 x dx = e 0.004 x
0
m
m
0
= 1 e0.004m
This condition implies e0.004m = 0.5 m = 250 ln 2 = 173.29 . 69. Solution: D The distribution function of an exponential random variable T with parameter is given by F ( t ) = 1  e  t , t > 0 Since we are told that T has a median of four hours, we may determine as follows: 1 = F ( 4 ) = 1  e 4 2 1 = e 4 2 4  ln ( 2 ) = 
=
4 ln ( 2 )
 5ln ( 2 ) 4
Therefore, Pr (T 5 ) = 1  F ( 5 ) = e 5 = e
= 25 4 = 0.42
70. Solution: E Let X denote actual losses incurred. We are given that X follows an exponential distribution with mean 300, and we are asked to find the 95th percentile of all claims that exceed 100 . Consequently, we want to find p95 such that Pr[100 < x < p95 ] F ( p95 )  F (100) 0.95 = = where F(x) is the distribution function of X . P[ X > 100] 1  F (100) Now F(x) = 1 ex/300 . 1  e  p95 / 300  (1  e 100 / 300 ) e 1/ 3  e  p95 / 300 = = 1  e1/ 3e  p95 / 300 Therefore, 0.95 = 1  (1  e 100 / 300 ) e 1/ 3 e  p95 / 300 = 0.05 e 1/3 p95 = 300 ln(0.05 e1/3) = 999
Page 29 of 54
71.
Solution: A The distribution function of Y is given by G ( y ) = Pr (T 2 y ) = Pr T y = F y = 1  4 y
(
)
( )
for y > 4 . Differentiate to obtain the density function g ( y ) = 4 y 2 Alternate solution: Differentiate F ( t ) to obtain f ( t ) = 8t 3 and set y = t 2 . Then t = g ( y ) = f ( t ( y ) ) dt dy = f d ( y ) dt ( y ) = 8 y
3 2
y and
1 1 2 2 y = 4y 2
72. Solution: E We are given that R is uniform on the interval ( 0.04, 0.08 ) and V = 10, 000e R Therefore, the distribution function of V is given by F ( v ) = Pr [V v ] = Pr 10, 000e R v = Pr R ln ( v )  ln (10, 000 )
1 ln ( v )ln (10,000 ) 1 = dr = r 0.04 0.04 0.04 v = 25 ln  0.04 10, 000
ln ( v )  ln (10,000 )
= 25ln ( v )  25ln (10, 000 )  1
0.04
73. Solution: E F ( y ) = Pr [Y y ] = Pr 10 X 0.8 y = Pr X Y 10
1 Y 4  Y 10 5 4 Therefore, f ( y ) = F ( y ) = e ( ) 8 10
1
( )
10
8
 (Y ) = 1  e 10
10
8
Page 30 of 54
74.
Solution: E First note R = 10/T . Then 10 10 10 FR(r) = P[R r] = P r = P T = 1  FT . Differentiating with respect to r T r 10 d 10 r fR(r) = FR(r) = d/dr 1  FT =  FT ( t ) 2 r dt r d 1 FT (t ) = fT (t ) = since T is uniformly distributed on [8, 12] . dt 4 1 10 5 Therefore fR(r) = 2 = 2 . 4 r 2r
75. Solution: A Let X and Y be the monthly profits of Company I and Company II, respectively. We are given that the pdf of X is f . Let us also take g to be the pdf of Y and take F and G to be the distribution functions corresponding to f and g . Then G(y) = Pr[Y y] = P[2X y] = P[X y/2] = F(y/2) and g(y) = G(y) = d/dy F(y/2) = ½ F(y/2) = ½ f(y/2) .
76. Solution: A First, observe that the distribution function of X is given by x 3 1 x 1 F ( x ) = 4 dt =  3  1 = 1  3 , x > 1 1 t t x Next, let X1, X2, and X3 denote the three claims made that have this distribution. Then if Y denotes the largest of these three claims, it follows that the distribution function of Y is given by G ( y ) = Pr [ X 1 y ] Pr [ X 2 y ] Pr [ X 3 y ] 1 = 1  3 , y>1 y while the density function of Y is given by 1 3 9 1 g ( y ) = G ' ( y ) = 3 1  3 4 = 4 1  3 y y y y Therefore,
2 2 3
,
y>1
Page 31 of 54
E [Y ] =
1
9 9 1 2 1 1  3 dy = 3 1  3 + 6 dy 3 1 y y y y y
2
9 18 9 9 18 9 = 3  6 + 9 dy =  2 + 5  8 1 y y y 2 y 5 y 8 y 1 1 2 1 = 9  + = 2.025 (in thousands) 2 5 8
77. Solution: D Prob. = 1 Note
1
2
2
1
1 ( x + y )dxdy = 0.625 8
Pr ( X 1) (Y 1) = Pr ( X > 1) (Y > 1) = 1  Pr ( X > 1) (Y > 1) 1 2 2 2 1 ( y + 2 )  ( y + 1) dy 16 18 30 = 1 = = 0.625 48 48 = 1 = 1 = 1
2 1
{
c
}
(De Morgan's Law) = 1
2 1
1 8 ( x + y ) dxdy
2 1
1 3 3 ( y + 2 )  ( y + 1) 48
1 21 2 2 1 2 ( x + y ) 1 dy 8 1 = 1  ( 64  27  27 + 8 ) 48
78. Solution: B That the device fails within the first hour means the joint density function must be integrated over the shaded region shown below.
This evaluation is more easily performed by integrating over the unshaded region and subtracting from 1.
Page 32 of 54
Pr ( X < 1) (Y < 1) = 1 = 1
3 1
3
1
2 3 x + 2 xy 1 3 x+ y dx dy = 1  dy = 1  ( 9 + 6 y  1  2 y ) dy 1 27 54 1 54 1 3
3
1 3 1 1 32 11 2 1 (8 + 4 y ) dy = 1  54 (8 y + 2 y ) 1 = 1  54 ( 24 + 18  8  2 ) = 1  54 = 27 = 0.41 54
79. Solution: E The domain of s and t is pictured below.
Note that the shaded region is the portion of the domain of s and t over which the device fails sometime during the first half hour. Therefore, 1/ 2 1 1 1/ 2 1 1 Pr S T = f ( s, t ) dsdt + f ( s, t ) dsdt 0 0 2 2 0 1/ 2 (where the first integral covers A and the second integral covers B). 80. Solution: C By the central limit theorem, the total contributions are approximately normally distributed with mean nµ = ( 2025 )( 3125 ) = 6,328,125 and standard deviation
n = 250 2025 = 11, 250 . From the tables, the 90th percentile for a standard normal
random variable is 1.282 . Letting p be the 90th percentile for total contributions, p  nµ = 1.282, and so p = nµ + 1.282 n = 6,328,125 + (1.282 )(11, 250 ) = 6,342,548 . n
Page 33 of 54
81. Solution: C 1 Let X1, . . . , X25 denote the 25 collision claims, and let X = (X1 + . . . +X25) . We are 25 given that each Xi (i = 1, . . . , 25) follows a normal distribution with mean 19,400 and standard deviation 5000 . As a result X also follows a normal distribution with mean 1 19,400 and standard deviation (5000) = 1000 . We conclude that P[ X > 20,000] 25 X  19, 400 20, 000  19, 400 X  19, 400 = P > > 0.6 = 1  (0.6) = 1 0.7257 = P 1000 1000 1000 = 0.2743 . 82. Solution: B Let X1, . . . , X1250 be the number of claims filed by each of the 1250 policyholders. We are given that each Xi follows a Poisson distribution with mean 2 . It follows that E[Xi] = Var[Xi] = 2 . Now we are interested in the random variable S = X1 + . . . + X1250 . Assuming that the random variables are independent, we may conclude that S has an approximate normal distribution with E[S] = Var[S] = (2)(1250) = 2500 . Therefore P[2450 < S < 2600] = S  2500 2450  2500 S  2500 2600  2500 < < < 2 P = P 1 < 50 2500 2500 2500 S  2500 S  2500 = P < 2  P < 1 50 50 S  2500 Then using the normal approximation with Z = , we have P[2450 < S < 2600] 50 P[Z < 2] P[Z > 1] = P[Z < 2] + P[Z < 1] 1 0.9773 + 0.8413 1 = 0.8186 .
83. Solution: B Let X1,..., Xn denote the life spans of the n light bulbs purchased. Since these random variables are independent and normally distributed with mean 3 and variance 1, the random variable S = X1 + ... + Xn is also normally distributed with mean µ = 3n and standard deviation = n Now we want to choose the smallest value for n such that S  3n 40  3n 0.9772 Pr [ S > 40] = Pr > n n This implies that n should satisfy the following inequality:
Page 34 of 54
40  3n n To find such an n, let's solve the corresponding equation for n: 40  3n 2 = n 2
2 n = 40  3n 3n  2 n  40 = 0 n + 10
(3
)(
n 4 =0 n =4 n = 16
)
84. Solution: B Observe that E [ X + Y ] = E [ X ] + E [Y ] = 50 + 20 = 70 Var [ X + Y ] = Var [ X ] + Var [Y ] + 2 Cov [ X , Y ] = 50 + 30 + 20 = 100 for a randomly selected person. It then follows from the Central Limit Theorem that T is approximately normal with mean E [T ] = 100 ( 70 ) = 7000 and variance Var [T ] = 100 (100 ) = 1002 Therefore, T  7000 7100  7000 Pr [T < 7100] = Pr < 100 100 = Pr [ Z < 1] = 0.8413 where Z is a standard normal random variable.
Page 35 of 54
85. Solution: B Denote the policy premium by P . Since x is exponential with parameter 1000, it follows from what we are given that E[X] = 1000, Var[X] = 1,000,000, Var[ X ] = 1000 and P = 100 + E[X] = 1,100 . Now if 100 policies are sold, then Total Premium Collected = 100(1,100) = 110,000 Moreover, if we denote total claims by S, and assume the claims of each policy are independent of the others then E[S] = 100 E[X] = (100)(1000) and Var[S] = 100 Var[X] = (100)(1,000,000) . It follows from the Central Limit Theorem that S is approximately normally distributed with mean 100,000 and standard deviation = 10,000 . Therefore, 110, 000  100, 000 P[S 110,000] = 1 P[S 110,000] = 1 P Z = 1 P[Z 1] = 1 10, 000 0.841 0.159 . 86. Solution: E Let X 1 ,..., X 100 denote the number of pensions that will be provided to each new recruit. Now under the assumptions given, 0 with probability 1  0.4 = 0.6 X i = 1 with probability ( 0.4 )( 0.25 ) = 0.1 2 with probability ( 0.4 )( 0.75 ) = 0.3 for i = 1,...,100 . Therefore,
E [ X i ] = ( 0 )( 0.6 ) + (1)( 0.1) + ( 2 )( 0.3) = 0.7 ,
2 2 2 2 E X i = ( 0 ) ( 0.6 ) + (1) ( 0.1) + ( 2 ) ( 0.3) = 1.3 , and 2 2 Var [ X i ] = E X i  { E [ X i ]} = 1.3  ( 0.7 ) = 0.81 Since X 1 ,..., X 100 are assumed by the consulting actuary to be independent, the Central 2
Limit Theorem then implies that S = X 1 + ... + X 100 is approximately normally distributed with mean E [ S ] = E [ X 1 ] + ... + E [ X 100 ] = 100 ( 0.7 ) = 70 and variance Var [ S ] = Var [ X 1 ] + ... + Var [ X 100 ] = 100 ( 0.81) = 81 Consequently, S  70 90.5  70 Pr [ S 90.5] = Pr 9 9 = Pr [ Z 2.28] = 0.99
Page 36 of 54
87. Solution: D Let X denote the difference between true and reported age. We are given X is uniformly distributed on (2.5,2.5) . That is, X has pdf f(x) = 1/5, 2.5 < x < 2.5 . It follows that µ x = E[X] = 0 x2 = Var[X] = E[X2] = x2 x3 dx = 5 15 2.5
2.5 2.5
2.5
=
2(2.5)3 =2.083 15
x =1.443 Now X 48 , the difference between the means of the true and rounded ages, has a 1.443 distribution that is approximately normal with mean 0 and standard deviation = 48 0.2083 . Therefore, 1 0.25 1 0.25 = P[1.2 Z 1.2] = P[Z 1.2] P[Z P  X 48 = P Z 4 0.2083 4 0.2083 1.2] = P[Z 1.2] 1 + P[Z 1.2] = 2P[Z 1.2] 1 = 2(0.8849) 1 = 0.77 . 88. Solution: C Let X denote the waiting time for a first claim from a good driver, and let Y denote the waiting time for a first claim from a bad driver. The problem statement implies that the respective distribution functions for X and Y are F ( x ) = 1  e x / 6 , x > 0 and
G ( y ) = 1  e y / 3 , y > 0
Therefore, Pr ( X 3) (Y 2 ) = Pr [ X 3] Pr [Y 2]
= F ( 3) G ( 2 ) = (1  e 1/ 2 )(1  e 2 / 3 ) = 1  e2 / 3  e1/ 2 + e7 / 6
Page 37 of 54
89.
Solution: B 6 (50  x  y ) We are given that f ( x, y ) = 125, 000 0 for 0 < x < 50  y < 50 otherwise
and we want to determine P[X > 20 Y > 20] . In order to determine integration limits, consider the following diagram: y
50
x>20 y>20 (20, 30) (30, 20)
50
x
6 We conclude that P[X > 20 Y > 20] = 125, 000 20
30 50  x
20
(50  x  y ) dy dx .
90. Solution: C Let T1 be the time until the next Basic Policy claim, and let T2 be the time until the next Deluxe policy claim. Then the joint pdf of T1 and T2 is 1 1 1 f (t1 , t2 ) = e  t1 / 2 e t2 / 3 = e t1 / 2 e t2 / 3 , 0 < t1 < , 0 < t2 < and we need to find 2 3 6
t1
P[T2 < T1] =
1 t / 2 t / 3 1  t / 2  t / 3 t1 6e 1 e 2 dt2 dt1 =  2 e 1 e 2 0 dt1 0 0 0
3 2 1  t1 / 2 1  t1 / 2  t1 / 3 1  t1 / 2 1 5t1 / 6 t1 / 2 3 5t1 / 6  e e dt1 = e  e + e = e = 1 5 = 5 dt1 = e 5 2 2 2 2 0 0 0 = 0.4 .
91. Solution: D We want to find P[X + Y > 1] . To this end, note that P[X + Y > 1] 1 1 2 2x + 2  y 1 = dydx = 2 xy + 2 y  8 y 1 x dx 4 0 1 x 0
1 2 1 2
= =
1 1 1 1 2 x + 1  2  2 x(1  x)  2 (1  x) + 8 (1  x) dx = 0
1
x + 2 x
0
1
1
2
1 1 1 +  x + x 2 dx 8 4 8
8 x
0
1
5
2
+
3 1 3 1 5 3 1 17 5 + + = x + dx = x 3 + x 2 + x = 8 8 0 24 8 8 24 4 8 24
1
Page 38 of 54
92.
Solution: B Let X and Y denote the two bids. Then the graph below illustrates the region over which X and Y differ by less than 20:
Based on the graph and the uniform distribution: Pr X  Y < 20 = Shaded Region Area
( 2200  2000 )
2
=
2002  2
1 2 (180 ) 2 2002
1802 2 = 1  ( 0.9 ) = 0.19 2 200 More formally (still using symmetry) Pr X  Y < 20 = 1  Pr X  Y 20 = 1  2 Pr [ X  Y 20] = 1
2200 1 1 x  20 dydx = 1  2 y 2000 dx 2 2020 2000 200 2020 200 2 2200 2 1 2 = 1 x  20  2000 ) dx = 1  x  2020 ) 2 2020 ( 2 ( 200 200
= 1  2
2200
2
x  20
2200 2020
180 = 1 = 0.19 200
Page 39 of 54
93. Solution: C Define X and Y to be loss amounts covered by the policies having deductibles of 1 and 2, respectively. The shaded portion of the graph below shows the region over which the total benefit paid to the family does not exceed 5:
We can also infer from the graph that the uniform random variables X and Y have joint 1 , 0 < x < 10 , 0 < y < 10 density function f ( x, y ) = 100 We could integrate f over the shaded region in order to determine the desired probability. However, since X and Y are uniform random variables, it is simpler to determine the portion of the 10 x 10 square that is shaded in the graph above. That is, Pr ( Total Benefit Paid Does not Exceed 5 )
= Pr ( 0 < X < 6, 0 < Y < 2 ) + Pr ( 0 < X < 1, 2 < Y < 7 ) + Pr (1 < X < 6, 2 < Y < 8  X ) =
( 6 )( 2 ) + (1)( 5 ) + (1 2 )( 5)( 5 ) =
100 100 100
12 5 12.5 + + = 0.295 100 100 100
94. Solution: C Let f ( t1 , t2 ) denote the joint density function of T1 and T2 . The domain of f is pictured below:
Now the area of this domain is given by 1 2 A = 62  ( 6  4 ) = 36  2 = 34 2
Page 40 of 54
1 , 0 < t1 < 6 , 0 < t2 < 6 , t1 + t2 < 10 Consequently, f ( t1 , t2 ) = 34 0 elsewhere and E [T1 + T2 ] = E [T1 ] + E [T2 ] = 2 E [T1 ] (due to symmetry)
6 1 6 10 t1 1 6 4 t 6 t 4 = 2 t1 dt2 dt1 + t1 dt2 dt1 = 2 t1 2 0 dt1 + t1 2 0 34 4 0 4 34 0 34 0 34 6 1 3t12 4 3t1 = 2 dt1 + (10t1  t12 ) dt1 = 2 34 4 34 0 17 4 0 10  t1 0
dt1
+
1 2 1 3 6 5t1  t1 4 34 3
24 1 64 = 2 + 180  72  80 + = 5.7 3 17 34
95. Solution: E t X +Y + t Y  X t t X t +t Y M ( t1 , t2 ) = E et1W +t2 Z = E e 1 ( ) 2 ( ) = E e( 1 2 ) e( 1 2 )
t t X t +t Y = E e( 1 2 ) E e( 1 2 ) = e 2
1
( t1 t2 )2
1
e2
( t1 + t2 )2
= e2
1
(t
2 2 1  2 t1t2 + t2
) 1 (t 2
e
2 2 1 + 2 t1t2 + t2
)
= et1 +t2
2
2
96. Solution: E Observe that the bus driver collect 21x50 = 1050 for the 21 tickets he sells. However, he may be required to refund 100 to one passenger if all 21 ticket holders show up. Since passengers show up or do not show up independently of one another, the probability that 21 21 all 21 passengers will show up is (1  0.02 ) = ( 0.98 ) = 0.65 . Therefore, the tour operator's expected revenue is 1050  (100 )( 0.65 ) = 985 .
Page 41 of 54
97.
Solution: C We are given f(t1, t2) = 2/L2, 0 t1 t2 L . L t2 2 2 2 2 2 Therefore, E[T1 + T2 ] = (t1 + t2 ) 2 dt1dt2 = L 0 0
t2 L 3 L 3 t1 2 t2 2 3 + t2 t1 dt1 = 2 + t2 dt2 0 3 L 0 3 0 4 L L 2 4 3 2 t 2 = 2 t2 dt2 = 2 2 = L2 L 03 L 3 0 3 t2
2 L2
(L, L)
t1
98. Solution: A Let g(y) be the probability function for Y = X1X2X3 . Note that Y = 1 if and only if X1 = X2 = X3 = 1 . Otherwise, Y = 0 . Since P[Y = 1] = P[X1 = 1 X2 = 1 X3 = 1] = P[X1 = 1] P[X2 = 1] P[X3 = 1] = (2/3)3 = 8/27 . 19 for y = 0 27 8 We conclude that g ( y ) = for y = 1 27 otherwise 0 19 8 t and M(t) = E e yt = 27 + 27 e
Page 42 of 54
99.
Solution: C We use the relationships Var ( aX + b ) = a 2 Var ( X ) , Cov ( aX , bY ) = ab Cov ( X , Y ) , and Var ( X + Y ) = Var ( X ) + Var (Y ) + 2 Cov ( X , Y ) . First we observe 17, 000 = Var ( X + Y ) = 5000 + 10, 000 + 2 Cov ( X , Y ) , and so Cov ( X , Y ) = 1000. We want to find Var ( X + 100 ) + 1.1Y = Var ( X + 1.1Y ) + 100 = Var [ X + 1.1Y ] = Var X + Var (1.1) Y + 2 Cov ( X ,1.1Y ) = Var X + (1.1) Var Y + 2 (1.1) Cov ( X , Y ) = 5000 + 12,100 + 2200 = 19,300.
2
100. Solution: B Note P(X = 0) = 1/6 P(X = 1) = 1/12 + 1/6 = 3/12 P(X = 2) = 1/12 + 1/3 + 1/6 = 7/12 . E[X] = (0)(1/6) + (1)(3/12) + (2)(7/12) = 17/12 E[X2] = (0)2(1/6) + (1)2(3/12) + (2)2(7/12) = 31/12 Var[X] = 31/12 (17/12)2 = 0.58 .
101. Solution: D Note that due to the independence of X and Y Var(Z) = Var(3X  Y  5) = Var(3X) + Var(Y) = 32 Var(X) + Var(Y) = 9(1) + 2 = 11 .
102. Solution: E Let X and Y denote the times that the two backup generators can operate. Now the variance of an exponential random variable with mean is 2 . Therefore, Var [ X ] = Var [Y ] = 102 = 100 Then assuming that X and Y are independent, we see Var [ X+Y ] = Var [ X ] + Var [ Y ] = 100 + 100 = 200
Page 43 of 54
103.
Solution: E Let X 1 , X 2 , and X 3 denote annual loss due to storm, fire, and theft, respectively. In addition, let Y = Max ( X 1 , X 2 , X 3 ) . Then
Pr [Y > 3] = 1  Pr [Y 3] = 1  Pr [ X 1 3] Pr [ X 2 3] Pr [ X 3 3] = 1  (1  e 3 ) 1  e
(
3 1.5
= 1  (1  e 3 )(1  e 2
)(1  e ) ) (1  e )
3 2.4 5 4
*
= 0.414 * Uses that if X has an exponential distribution with mean µ
Pr ( X x ) = 1  Pr ( X x ) = 1 
x
1
µ
e  t µ dt = 1  ( e t µ ) = 1  e x µ x
104. Solution: B Let us first determine k: 1= Then E [ X ] = 2 x 2 dydx = 2 x 2 dx =
1 0 0 0 1 1 1 0
1 0
kxdxdy =
1k 1 2 1 k kx  0 dy = dy = 0 2 0 2 2 1
k =2 2 31 2 x 0= 3 3 1 2 1 1 y 0= 2 2
E [Y ] = y 2 x dxdy = ydy =
1 0 0 0
1 1
E [ XY ] = =
1 0
1 0
2x 2 ydxdy =
12 2 3 1 x y  0 dy = ydy 0 3 0 3 1
2 2 1 2 1 y 0 = = 6 6 3
1 2 1 1 1 Cov [ X , Y ] = E [ XY ]  E [ X ] E [Y ] =  =  = 0 3 3 2 3 3 (Alternative Solution) Define g(x) = kx and h(y) = 1 . Then f(x,y) = g(x)h(x) In other words, f(x,y) can be written as the product of a function of x alone and a function of y alone. It follows that X and Y are independent. Therefore, Cov[X, Y] = 0 .
Page 44 of 54
105.
Solution: A The calculation requires integrating over the indicated region.
E(X ) = E (Y ) =
1
0
2x
x
14 8 2 x y dy dx = x 2 y 2 0 3 3 2x
2x
x
1 4 4 4 dx = x 2 ( 4 x 2  x 2 ) dx = 4 x 4 dx = x5 = 0 3 0 5 0 5 1 1 1
1
1
0
2x
x
18 8 2 xy dy dx = xy 3 0 9 3 2x
x
1 56 8 56 5 56 dy dx = x ( 8 x3  x3 ) dx = x 4 dx = x = 0 9 0 9 45 0 45 2x
E ( XY ) =
1
0
x
18 8 2 2 x y dy dx = x 2 y 3 0 9 3
x
dx =
1 56 56 28 8 2 = x ( 8 x3  x3 ) dx = x5 dx = 0 9 0 9 54 27 1
Cov ( X , Y ) = E ( XY )  E ( X ) E (Y ) =
28 56 4  = 0.04 27 45 5
106. Solution: C The joint pdf of X and Y is f(x,y) = f2(yx) f1(x) = (1/x)(1/12), 0 < y < x, 0 < x < 12 . Therefore, 12 x 12 12 1 y x x x 2 12 =6 dydx = dx = dx = E[X] = x 12 x 12 0 12 24 0 0 0 0 0
12 12 y2 y x x 2 12 144 E[Y] = =3 dydx = dx = dx = = 12 x 24 x 0 24 48 0 48 0 0 0 0 12 x
x
12 x
E[XY] =
12 12 2 y2 y x x3 12 (12)3 = 24 dydx = dx = dx = = 12 24 72 0 72 24 0 0 0 0 0
x
Cov(X,Y) = E[XY] E[X]E[Y] = 24  (3)(6) = 24 18 = 6 .
Page 45 of 54
107.
Solution: A Cov ( C1 , C2 ) = Cov ( X + Y , X + 1.2Y )
= Cov ( X , X ) + Cov (Y , X ) + Cov ( X ,1.2Y ) + Cov ( Y,1.2Y ) = Var X + Cov ( X , Y ) + 1.2Cov ( X , Y ) + 1.2VarY = Var X + 2.2 Cov ( X , Y ) + 1.2VarY Var X = E ( X 2 )  ( E ( X ) ) = 27.4  52 = 2.4
2
Var Y = E (Y 2 )  ( E (Y ) ) = 51.4  7 2 = 2.4
2
Var ( X + Y ) = Var X + Var Y + 2 Cov ( X , Y ) 1 ( Var ( X + Y )  Var X  Var Y ) = 1 ( 8  2.4  2.4) = 1.6 2 2 Cov ( C1 , C2 ) = 2.4 + 2.2 (1.6 ) + 1.2 ( 2.4 ) = 8.8 Cov ( X , Y ) =
107. Alternate solution: We are given the following information: C1 = X + Y
C2 = X + 1.2Y E[X ] = 5 E [Y ] = 7 E X 2 = 27.4 E Y 2 = 51.4
Var [ X + Y ] = 8 Now we want to calculate Cov ( C1 , C2 ) = Cov ( X + Y , X + 1.2Y ) = E ( X + Y )( X + 1.2Y )  E [ X + Y ]i E [ X + 1.2Y ] = E X 2 + 2.2 XY + 1.2Y 2  ( E [ X ] + E [Y ]) ( E [ X ] + 1.2 E [Y ]) = E X 2 + 2.2 E [ XY ] + 1.2 E Y 2  ( 5 + 7 ) ( 5 + (1.2 ) 7 ) = 27.4 + 2.2 E [ XY ] + 1.2 ( 51.4 )  (12 )(13.4 ) = 2.2 E [ XY ]  71.72
Therefore, we need to calculate E [ XY ] first. To this end, observe
Page 46 of 54
2 2 8 = Var [ X + Y ] = E ( X + Y )  ( E [ X + Y ])
= E X 2 + 2 XY + Y 2  ( E [ X ] + E [Y ]) = E X 2 + 2 E [ XY ] + E Y 2  ( 5 + 7 ) = 27.4 + 2 E [ XY ] + 51.4  144 = 2 E [ XY ]  65.2 Finally, Cov ( C1,C2 ) = 2.2 ( 36.6 )  71.72 = 8.8 E [ XY ] = ( 8 + 65.2 ) 2 = 36.6
2
2
108. Solution: A The joint density of T1 and T2 is given by f ( t1 , t2 ) = e  t1 e t2 , t1 > 0 , t2 > 0 Therefore, Pr [ X x ] = Pr [ 2T1 + T2 x ]
=
x 0
1 ( x  t2 ) 2 0
x e  t1 e t2 dt1dt2 = e  t2 e t1 0
1 ( x  t2 ) 2 0
dt2
1 1 1 1  x + t2  x  t2 x x = e  t2 1  e 2 2 dt2 = e  t2  e 2 e 2 dt2 0 0 1 1  x  t2 =  e  t 2 + 2e 2 e 2  1 x x 0
=  e  x + 2e
 1 x

1 1 x  x 2 2
e
+ 1  2e

1 x 2
= 1  e  x + 2e  x  2 e 2 = 1  2 e 2 + e  x , x > 0 It follows that the density of X is given by 1 1  x  x d 1  2e 2 + e  x = e 2  e  x , x > 0 g ( x) = dx
Page 47 of 54
109.
Solution: B Let u be annual claims, v be annual premiums, g(u, v) be the joint density function of U and V, f(x) be the density function of X, and F(x) be the distribution function of X. Then since U and V are independent, 1 1 g ( u, v ) = ( eu ) e v / 2 = eu e v / 2 , 0 < u < , 0 < v < 2 2 and u F ( x ) = Pr [ X x ] = Pr x = Pr [U Vx ] v vx vx 1 e u e v / 2 dudv = g ( u, v )dudv = 0 0 0 0 2 1 1 1 vx =  e  u e  v / 2  0 dv =  e vx e v / 2 + e v / 2 dv 0 0 2 2 2
1  v x +1/ 2) 1  v / 2 =  e ( + e dv 0 2 2
1 1  v x +1/ 2 ) +1 e ( =  e v / 2 =  2x + 1 2x + 1 0 2 Finally, f ( x ) = F ' ( x ) = 2 ( 2 x + 1)
110. Solution: C Note that the conditional density function 1 f (1 3, y ) 2 f y x= = , 0< y< , f x (1 3) 3 3
23 23 2 3 16 1 f x = 24 (1 3) y dy = 8 y dy = 4 y 2 = 0 9 0 3 0 1 9 9 2 It follows that f y x = = f (1 3, y ) = y , 0 < y < 3 16 2 3 139 9 Consequently, Pr Y < X X = 1 3 = y dy = y 2 0 2 4 13
=
0
1 4
Page 48 of 54
111.
Solution: E
3 f ( 2, y ) Pr 1 < Y < 3 X = 2 = dy 1 f x ( 2)
f ( 2, y ) =
2 1  4 1 2 1 y ( ) = y 3 4 ( 2  1) 2
1 1 1 f x ( 2 ) = y 3 dy =  y 2 = 2 4 4 1 1 Finally, Pr 1 < Y < 3 X = 2 =
3 1
1 3 y dy 3 1 8 2 =  y 2 = 1  = 1 1 9 9 4
112. Solution: D We are given that the joint pdf of X and Y is f(x,y) = 2(x+y), 0 < y < x < 1 . Now fx(x) = (2 x + 2 y )dy = 2 xy + y 2
0 x x 0
= 2x2 + x2 = 3x2, 0 < x < 1
f ( x, y ) 2( x + y ) 2 1 y = = + 2 , 0 < y < x f x ( x) 3x 2 3 x x 2 1 y 2 f(yx = 0.10) = + = [10 + 100 y ] , 0 < y < 0.10 3 0.1 0.01 3
so f(yx) =
0.05
P[Y < 0.05X = 0.10] =
2 100 20 3 [10 + 100 y ] dy = 3 y + 3 y
0
2
5 0.05 1 1 = + = = 0.4167 . 3 12 12 0
113. Solution: E Let W = event that wife survives at least 10 years H = event that husband survives at least 10 years B = benefit paid P = profit from selling policies Then Pr [ H ] = P [ H W ] + Pr H W c = 0.96 + 0.01 = 0.97 and Pr [W  H ] = Pr [W H ] 0.96 = = 0.9897 Pr [ H ] 0.97 Pr H W c Pr [ H ] = 0.01 = 0.0103 0.97
Pr W c  H =
Page 49 of 54
It follows that E [ P ] = E [1000  B ] = 1000  E [ B ] = 1000  ( 0 ) Pr [W  H ] + (10, 000 ) Pr W c  H = 1000  10, 000 ( 0.0103) = 1000  103 = 897
{
}
114. Solution: C Note that P(Y = 0X = 1) =
P( X = 1, Y = 0) P( X = 1, Y = 0) 0.05 = = P( X = 1) P ( X = 1, Y = 0) + P( X = 1, Y = 1) 0.05 + 0.125
= 0.286 P(Y = 1X=1) = 1 P(Y = 0 X = 1) = 1 0.286 = 0.714 Therefore, E(YX = 1) = (0) P(Y = 0X = 1) + (1) P(Y = 1X = 1) = (1)(0.714) = 0.714 E(Y2X = 1) = (0)2 P(Y = 0X = 1) + (1)2 P(Y = 1X = 1) = 0.714 Var(YX = 1) = E(Y2X = 1) [E(YX = 1)]2 = 0.714 (0.714)2 = 0.20 115. Solution: A Let f1(x) denote the marginal density function of X. Then
f1 ( x ) =
x +1 x
2 xdy = 2 xy  x +1 = 2 x ( x + 1  x ) = 2 x x
,
0< x<1
Consequently,
f ( x, y ) 1 if: x < y < x + 1 = f1 ( x ) 0 otherwise x +1 1 1 1 1 1 1 1 2 E [Y  X ] = ydy = y 2  x +1 = ( x + 1)  x 2 = x 2 + x +  x 2 = x + x x 2 2 2 2 2 2 2 x +1 1 1 1 3 E Y 2  X = y 2 dy = y 3  x +1 = ( x + 1)  x3 x x 3 3 3 1 1 1 1 = x3 + x 2 + x +  x3 = x 2 + x + 3 3 3 3 f ( y x ) =
2 2 2 2
1 1 Var [Y  X ] = E Y  X  { E [Y  X ]} = x + x +  x + 3 2 1 1 1 = x2 + x +  x2  x  = 3 4 12
Page 50 of 54
116.
Solution: D Denote the number of tornadoes in counties P and Q by NP and NQ, respectively. Then E[NQNP = 0] = [(0)(0.12) + (1)(0.06) + (2)(0.05) + 3(0.02)] / [0.12 + 0.06 + 0.05 + 0.02] = 0.88 E[NQ2NP = 0] = [(0)2(0.12) + (1)2(0.06) + (2)2(0.05) + (3)2(0.02)] / [0.12 + 0.06 + 0.05 + 0.02] = 1.76 and Var[NQNP = 0] = E[NQ2NP = 0] {E[NQNP = 0]}2 = 1.76 (0.88)2 = 0.9856 .
117. Solution: C The domain of X and Y is pictured below. The shaded region is the portion of the domain over which X<0.2 .
Now observe Pr [ X < 0.2] =
0.2 0
1 x
0
6 1  ( x + y ) dydx = 6 0
0.2
1 2 y  xy  2 y dx 0
1 x
0.2 0.2 1 1 2 2 2 = 6 1  x  x (1  x )  (1  x ) dx = 6 (1  x )  (1  x ) dx 0 0 2 2 0.2 1 2 3 3 = 6 (1  x ) dx =  (1  x )  0.2 =  ( 0.8) + 1 = 0.488 0 0 2
118. Solution: E The shaded portion of the graph below shows the region over which f ( x, y ) is nonzero:
We can infer from the graph that the marginal density function of Y is given by
g ( y ) = 15 y dx = 15 xy
y y y
= 15 y
y
(
y  y = 15 y 3 2 (1  y1 2 ) , 0 < y < 1
)
Page 51 of 54
12 32 15 y (1  y ) , 0 < y < 1 or more precisely, g ( y ) = otherwise 0
119. Solution: D The diagram below illustrates the domain of the joint density f ( x, y ) of X and Y .
We are told that the marginal density function of X is f x ( x ) = 1 , 0 < x < 1 while f y x ( y x ) = 1 , x < y < x + 1 1 It follows that f ( x, y ) = f x ( x ) f y x ( y x ) = 0 Therefore, Pr [Y > 0.5] = 1  Pr [Y 0.5] = 1  = 1
1 2 1 0 2
if 0 < x < 1 , x < y < x + 1 otherwise
1
x
2
dydx
1 2 12 1 1 7 1 1  x dx = 1  x  x 0 = 1  + = 0 0 2 4 8 8 2 2 [Note since the density is constant over the shaded parallelogram in the figure the solution is also obtained as the ratio of the area of the portion of the parallelogram above y = 0.5 to the entire shaded area.] y
1 2 x
dx = 1 
1
2
Page 52 of 54
120.
Solution: A We are given that X denotes loss. In addition, denote the time required to process a claim by T. 3 2 1 3 x = x , x < t < 2 x, 0 x 2 Then the joint pdf of X and T is f ( x, t ) = 8 x 8 0, otherwise. Now we can find P[T 3] = 4 4 2 4 3 12 3 12 3 12 1 36 27 xdxdt = x 2 dt =  t 2 dt =  t 3 =  1   t2 8 16 t / 2 16 64 4 16 64 3 16 64 3 / 3 3 = 11/64 = 0.17 . t t = 2x
4 2
4 3 2 1 1 2
t=x
x
121. Solution: C The marginal density of X is given by 1 1 xy 3 1 x fx ( x) = 10  xy 2 ) dy = 10 y  ( = 10  0 64 64 3 0 64 3
1 1
Then E ( X ) = x f x ( x)dx =
2
10
10
2
1 2 x3 1 x2 5x  10 x  dx = 64 9 2 64 3
10
=
1 1000 8 500  9  20  9 = 5.778 64
Page 53 of 54
122.
Solution: D The marginal distribution of Y is given by f2(y) = 6 e e
x
0
y
2y
dx = 6 e
2y
e
0
y
x
dx
= 6 e2y ey + 6e2y = 6 e2y 6 e3y, 0 < y <
Therefore, E(Y) =
6 6 2y 3y 2 ye dy  3 3 y e dy 20 0 But 2 y e2y dy and 3 y e3y dy are equivalent to the means of exponential random
0 0
0
y
f2(y) dy = (6 ye
0
2 y
 6 ye
3 y
) dy = 6
ye
0
2 y
dy 6
y
0
e3y dy =
variables with parameters 1/2 and 1/3, respectively. In other words, 2 y e2y dy = 1/2
0
and 3 y e3y dy = 1/3 . We conclude that E(Y) = (6/2) (1/2) (6/3) (1/3) = 3/2 2/3 =
0
9/6  4/6 = 5/6 = 0.83 . 123. Solution: C Observe Pr [ 4 < S < 8] = Pr 4 < S < 8 N = 1 Pr [ N = 1] + Pr 4 < S < 8 N > 1 Pr [ N > 1] 8 1 4 1 1 = e 5  e 5 + e 2  e 1 * 3 6 = 0.122 *Uses that if X has an exponential distribution with mean µ
(
) (
)
Pr ( a X b ) = Pr ( X a )  Pr ( X b ) =
a
1
µ
e
t µ
dt 
b
1
µ
e
t µ
dt = e

a
µ
e

b
µ
Page 54 of 54
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