Hi, In the CS2A paper for April 2019 in Q6iii), in the transition graph in the solutions the transition rate from going to the state space of there being two policies to the state space of there being 1 policy is 0.4. It says in the Q that 'The transition rate at which an individual policy terminates is 0.2 per annum, and the policies are independent of each other' so I thought this transition rate would be 0.2 and am a bit confused about where the 0.4 comes from as we're only losing one policy? Thanks in advance!
Hi f12378 When there are two policies, if either one terminates then we go to there being one. As each one terminates with a rate of 0.2, the overall rate that we go from two to one is 2 * 0.2 = 0.4. Hope that helps Andy