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Question 30.14

A

ActStudent1405

Member
Statistical methods - the mean, variance and co-variance of the loss distribution are combined with the normal distribution to estimate the capital. Why is the normal distribution chosen? Can other distributions be used?
 
The normal distribution is used for ease of application (and if the underlying distribution is unknown, the normal is a sensible proxy). As for using others, I don't see why not :)
 
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