Exp. Distribution

PensFan10 · #1 $Old$ July 2nd, 2009, 09:58 AM

An insurance company does not pay 75 percent of claims. For the remaining claims, they are exponentially distributed with a mean of 10. What is the expected claim payout.

thanks

CaptainBlack · #2 $Old$ July 2nd, 2009, 10:30 PM

Quote:

Originally Posted by PensFan10 $View Post$

An insurance company does not pay 75 percent of claims. For the remaining claims, they are exponentially distributed with a mean of 10. What is the expected claim payout.

thanks

The distribution of the remaining 25% is irrelevant, only the mean:

$0 \times 0.75 + 10 \times 0.25$

CB