Hi all Two queries about CT3-10: 1) In Example 10.7 (top of page 18), a constant is added because of the combinatorial factor. Why is this combinatorial factor not needed in other examples, e.g. in Example 10.6? 2) On page 21 (near the top), what is the difference between X with or without a bar underneath? Thanks
1) Out of our sample of 100 values, 60 are in the first group (1 claims), 24 are in the second group (2 claims) and 16 are in the third group (3 or more claims). But which 60 out of the 100 values are in the first group? and which 24 are in the second group? etc. So we need to consider all the combinations. hence the constant. Whereas in Example 10.6 there is only one "group" of 3 claims. So we know all 3 are in this group. In short, if there's more than one group you need the constant. 2) Oops! there appears to be an error here. All the X's should have a bar underneath. I'll get that one in the corrections document.
