Q 3.22 [Question and Answer Bank]

Part (ii) Alternatively, to get an initial approximation for (mu cap) we can equate the theoretical probability of no claims with observed proportion of 8/20.

How this 8/20 came?

And, I could not understand how the table is drawn...
I am stuck here. Can someone help me?

 

All you had to do was find the value of (mu cap) which satisfy MLE.

P(X<=1)=15/20 and P(X=0)=8/20 was taken JUST as initial approximation! (For simplicity , as we know Probability is near)
There is no rule, unless specified.

 

Yes, got it. The question's first line was scrolled up. So, I missed no and n1 values before, which created confusion.