CT3 IFoA April 2012 Q10(ii)(a)

[Chandrima]

How are they calculating E(S|N=n) ? Someone please help. I have exam on 21st. Please see screenshot of question and answer as attached. I am not understanding the underlined parts. How is it E(X) and 2*E(X)?

 

[John Lee]

So \(E(S|N=1) = E(X_1) = E(X)\) and \(E(S|N=2) = E(X_1 + X_2) = E(X_1) + E(X_2) = 2E(X)\)

 

[Chandrima]

Yup Sir, I got it later. Thanks so much.