P
Paapi
Member
For part(ii
) you are asked to calculate the posterior distribution of theta.
I thought you would derive the posterior the normal way wich is prior multiplies by the likelihood interms of x (as is always the case).
But here they have taken X = total number of claims in year i = n1Y1/c, and then shown the likelihood interms of this new X = n1Y1 /c
How do you know that you need to use this result of X?
In part (iii) The first line to this solution is -
E(Y|y1,y2) = c(1+ r)^2 * E(X3|y1,y2)
Whats the logic behind this result?? This question seems to be the hardest in the paper.
I thought you would derive the posterior the normal way wich is prior multiplies by the likelihood interms of x (as is always the case).
But here they have taken X = total number of claims in year i = n1Y1/c, and then shown the likelihood interms of this new X = n1Y1 /c
How do you know that you need to use this result of X?
In part (iii) The first line to this solution is -
E(Y|y1,y2) = c(1+ r)^2 * E(X3|y1,y2)
Whats the logic behind this result?? This question seems to be the hardest in the paper.