Chapter 18 Question 10

[purple-snail]

Hi

Please Help!!

Maybe it's because it's late...and I know there's a correction needed at the end of the solution to this question, but :

On the Second last line of the solution (page 65 Chap 18 CMP), where does the mui_F come from in the denominator of the second bracket??


(mui = mean, and _F = "subscript F")

Thanks a million

 

[td290]

Not well explained!

It's not just because it's late. It had me puzzled at first and I don't think it's well explained. You've probably gathered that moving from the previous equation to the one you're talking about involves several stages, the first of which is squaring both sides of the equation. This will give an n²_F term in the numerator of the right-hand side.

Next we use the usual trick of assuming that n_F is equal to the expected number of claims, i.e. μ_F. This allows us to replace the n²_F term with n_F × μ_F. Hopefully it's reasonably clear where to go from here.

 

[purple-snail]

Excellent!

Thank you very much!
Very clearly explained by you td290...although I totally agree, it would really help if they included the
n²_F = n_F × μ_F substitution in the notes.
It was actually driving me a little mad (and my algebraic manipulation is usually strong!).