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EXAM P PROBABILITY

P SAMPLE EXAM QUESTIONS

Copyright 2009 by the Society of Actuaries and the Casualty Actuarial Society

Some of the questions in this study note are taken from past SOA/CAS examinations.

PRINTED IN U.S.A.

1 of 102

1.

A survey of a group’s viewing habits over the last year revealed the following information:

(i) (ii) (iii) (iv) (v) (vi) (vii)

28% watched gymnastics 29% watched baseball 19% watched soccer 14% watched gymnastics and baseball 12% watched baseball and soccer 10% watched gymnastics and soccer 8% watched all three sports.

Calculate the percentage of the group that watched none of the three sports during the last year.

(A) (B) (C) (D) (E)

24 36 41 52 60

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2.

The probability that a visit to a primary care physician’s (PCP) office results in neither lab work nor referral to a specialist is 35% . Of those coming to a PCP’s office, 30% are referred to specialists and 40% require lab work.

Determine the probability that a visit to a PCP’s office results in both lab work and referral to a specialist.

(A) (B) (C) (D) (E)

0.05 0.12 0.18 0.25 0.35

3.

You are given P[A∪B] = 0.7 and P[A∪B′] = 0.9 .

Determine P[A] .

(A) (B) (C) (D) (E)

0.2 0.3 0.4 0.6 0.8

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4.

An urn contains 10 balls: 4 red and 6 blue. A second urn contains 16 red balls and an unknown number of blue balls. A single ball is drawn from each urn. The probability that both balls are the same color is 0.44 .

Calculate the number of blue balls in the second urn.

(A) (B) (C) (D) (E) 5.

4 20 24 44 64

An auto insurance company has 10,000 policyholders. Each policyholder is classified as (i) (ii) (iii) young or old; male or female; and married or single.

Of these policyholders, 3000 are young, 4600 are male, and 7000 are married. The policyholders can also be classified as 1320 young males, 3010 married males, and 1400 young married persons. Finally, 600 of the policyholders are young married males.

How many of the company’s policyholders are young, female, and single?

4 of 102

(A) (B) (C) (D) (E) 6.

280 423 486 880 896

A public health researcher examines the medical records of a group of 937 men who died in 1999 and discovers that 210 of the men died from causes related to heart disease. Moreover, 312 of the 937 men had at least one parent who suffered from heart disease, and, of these 312 men, 102 died from causes related to heart disease.

Determine the probability that a man randomly selected from this group died of causes related to heart disease, given that neither of his parents suffered from heart disease.

(A) (B) (C) (D) (E)

0.115 0.173 0.224 0.327 0.514

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7.

An insurance company estimates that 40% of policyholders who have only an auto policy will renew next year and 60% of policyholders who have only a homeowners policy will renew next year. The company estimates that 80% of policyholders who have both an auto and a homeowners policy will renew at least one of those policies next year.

Company records show that 65% of policyholders have an auto policy, 50% of policyholders have a homeowners policy, and 15% of policyholders have both an auto and a homeowners policy.

Using the company’s estimates, calculate the percentage of policyholders that will renew at least one policy next year.

(A) (B) (C) (D) (E)

20 29 41 53 70

6 of 102

26 0. whereas 12% visit neither of these. 7 of 102 . 15% insure a sports car. The probability that a patient visits a chiropractor exceeds by 0. 20% of the customers insure a sports car. Calculate the probability that a randomly selected customer insures exactly one car and that car is not a sports car. Of those customers who insure more than one car.62 An insurance company examines its pool of auto insurance customers and gathers the following information: (i) (ii) (iii) (iv) All customers insure at least one car. Among a large group of patients recovering from shoulder injuries.8. it is found that 22% visit both a physical therapist and a chiropractor. 70% of the customers insure more than one car.40 0. 0.38 0. (A) (B) (C) (D) (E) 9.14 the probability that a patient visits a physical therapist.48 0. Determine the probability that a randomly chosen member of this group visits a physical therapist.

30 An insurance company examines its pool of auto insurance customers and gathers the following information: (i) (ii) (iii) (iv) All customers insure at least one car.16 0. 64% of the customers insure more than one car.19 0.21 0. 20% of the customers insure a sports car. 0.(A) (B) (C) (D) (E) 10.29 0.31 8 of 102 .25 0. 15% insure a sports car. What is the probability that a randomly selected customer insures exactly one car.13 0.26 0. Of those customers who insure more than one car. and that car is not a sports car? (A) (B) (C) (D) (E) 0.24 0.

33 0. The probability that an automobile owner purchases both collision and disability coverages is 0. An actuary studying the insurance preferences of automobile owners makes the following conclusions: (i) (ii) (iii) An automobile owner is twice as likely to purchase collision coverage as disability coverage. What is the probability that an automobile owner purchases neither collision nor disability coverage? (A) (B) (C) (D) (E) 0.67 0.15 .11.82 9 of 102 .18 0. The event that an automobile owner purchases collision coverage is independent of the event that he or she purchases disability coverage.48 0.

A doctor is studying the relationship between blood pressure and heartbeat abnormalities in her patients. Of those with an irregular heartbeat.1 that a woman in the population has only this risk factor (and no others). The probability that a woman has all three risk factors. 15% have an irregular heartbeat. For each of the three factors. For any two of the three factors. Of those with normal blood pressure. 2% 5% 8% 9% 20% An actuary is studying the prevalence of three health risk factors. within a population of women. denoted by A. given that she has A and B. the probability is 0. What portion of the patients selected have a regular heartbeat and low blood pressure? (A) (B) (C) (D) (E) 13. low.12 that she has exactly these two risk factors (but not the other).12. is 1 . one-third have high blood pressure. She finds that: (i) (ii) (iii) (iv) (v) 14% have high blood pressure. B. and C. the probability is 0. She tests a random sample of her patients and notes their blood pressures (high. or normal) and their heartbeats (regular or irregular). one-eighth have an irregular heartbeat. 22% have low blood pressure. 3 10 of 102 .

700 In modeling the number of claims filed by an individual under an automobile policy during a three-year period.04 0.467 0.20 0.311 0.What is the probability that a woman has none of the three risk factors. what is the probability that a policyholder files more than one claim during the period? (A) (B) (C) (D) (E) 0.16 0. Under this assumption. 0.96 11 of 102 . where pn represents the probability that the policyholder files 5 n claims during the period. pn +1 = 1 pn .280 0.80 0.484 0. an actuary makes the simplifying assumption that for all integers n ≥ 0. given that she does not have risk factor A? (A) (B) (C) (D) (E) 14.

An insurer offers a health plan to the employees of a large company. and . . and C are respectively. B. the individual employees may choose exactly two of the supplementary coverages A. As part of this plan. or they may choose no supplementary coverage. 1 1 5 . 4 3 12 Determine the probability that a randomly chosen employee will choose no supplementary coverage. B. (A) (B) (C) (D) (E) 0 47 144 1 2 97 144 7 9 12 of 102 . The proportions of the company’s employees that choose coverages A.15. and C.

is a random variable with P[N = n] = 1 1 . the number of claims received in a week. (A) (B) (C) (D) (E) 1 256 1 128 7 512 1 64 1 32 13 of 102 . Determine the probability that exactly seven claims will be received during a given two-week period. An insurance company determines that N.16. The company also determines that 2n+ the number of claims received in a given week is independent of the number of claims received in any other week. where n ≥ 0 .

005h of the height of the tower? 14 of 102 . The error made by the more accurate instrument is normally distributed with mean 0 and standard deviation 0. h. The number of claims that do not include emergency room charges is 25% of the total number of claims. what is the probability that their average value is within 0.40 0. The occurrence of emergency room charges is independent of the occurrence of operating room charges on hospital claims.10 0.17. 0.25 0. The error made by the less accurate instrument is normally distributed with mean 0 and standard deviation 0.0044h . An insurance company pays hospital claims.20 0.80 Two instruments are used to measure the height. of a tower.0056h . (A) (B) (C) (D) (E) 18. The number of claims that include emergency room or operating room charges is 85% of the total number of claims. Assuming the two measurements are independent random variables. Calculate the probability that a claim submitted to the insurance company includes operating room charges.

Calculate the probability that the driver was age 16-20.40 15 of 102 .04 Portion of Company’s Insured Drivers 0. 0.16 0. An actuary compiled the following statistics on the company’s insured drivers: Age of Driver 16-20 21-30 31-65 66-99 Probability of Accident 0.90 An auto insurance company insures drivers of all ages.15 0.28 A randomly selected driver that the company insures has an accident.23 0.68 0.38 0.08 0.(A) (B) (C) (D) (E) 19.02 0.49 0.13 0.47 0.84 0.19 0. (A) (B) (C) (D) (E) 0.03 0.06 0.

What is the probability that the deceased policyholder was ultra-preferred? (A) (B) (C) (D) (E) 0.0141 0. 40% are preferred. Of the company’s policyholders.010 of dying in the next year.2817 16 of 102 .005 of dying in the next year.001 of dying in the next year. preferred. and each ultra-preferred policyholder has probability 0. each preferred policyholder has probability 0.0071 0. Each standard policyholder has probability 0.0001 0. 50% are standard. An insurance company issues life insurance policies in three separate categories: standard. and ultra-preferred.20. and 10% are ultra-preferred.0010 0. A policyholder dies in the next year.

or stable.39 0. 30% of the emergency room patients were serious. 10% of the serious patients died. and 50% as nonsmokers. but only half as likely as heavy smokers. In the past year: (i) (ii) (iii) (iv) (vi) (vii) 10% of the emergency room patients were critical.06 0. 17 of 102 . 0. the rest of the emergency room patients were stable.30 0.29 0. A randomly selected participant from the study died over the five-year period. patients are categorized according to their condition as critical. 30% as light smokers. and 1% of the stable patients died.21. 20% were classified as heavy smokers. what is the probability that the patient was categorized as serious upon arrival? (A) (B) (C) (D) (E) 22.64 A health study tracked a group of persons for five years. Given that a patient survived. Upon arrival at a hospital’s emergency room. serious. Results of the study showed that light smokers were twice as likely as nonsmokers to die during the five-year study. At the beginning of the study. 40% of the critical patients died.

Type of driver Teen Young adult Midlife Senior Total Percentage of all drivers 8% 16% 45% 31% 100% Probability of at least one collision 0. what is the probability that the driver is a young adult driver? (A) (B) (C) (D) (E) 0.15 0.16 0. The results of the study are presented below.08 0.25 0.25 18 of 102 .22 0.06 0.35 0.05 Given that a driver has been involved in at least one collision in the past year.Calculate the probability that the participant was a heavy smoker.42 0.19 0.57 An actuary studied the likelihood that different types of drivers would be involved in at least one collision during any one-year period. 0.04 0.20 0. (A) (B) (C) (D) (E) 23.

Calculate the probability that a person has the disease given that the test indicates the presence of the disease.5% of the time when the disease is not present. One percent of the population actually has the disease. 19 of 102 . (n + 1)(n + 2) Determine the probability of at least one claim during a particular month. A blood test indicates the presence of a particular disease 95% of the time when the disease is actually present. given that there have been at most four claims during that month. The number of injury claims per month is modeled by a random variable N with P[N = n] = 1 . The same test indicates the presence of the disease 0. where n ≥ 0 . (A) (B) (C) (D) (E) 1 3 2 5 1 2 3 5 5 6 25.24.

324 0.(A) (B) (C) (D) (E) 26. given that he is a smoker? (A) (B) (C) (D) (E) 1 4 1 3 2 5 1 2 2 3 20 of 102 . Males who have a circulation problem are twice as likely to be smokers as those who do not have a circulation problem. 0.25 .950 0. What is the conditional probability that a male has a circulation problem.657 0.995 The probability that a randomly chosen male has a circulation problem is 0.945 0.

03 0. 21 of 102 .04 An automobile from one of the model years 1997.45 0.50 A hospital receives 1/5 of its flu vaccine shipments from Company X and the remainder of its shipments from other companies. Each shipment contains a very large number of vaccine vials. (A) (B) (C) (D) (E) 28.05 0.18 0.02 0. and 1999 was involved in an accident. 1998.27.20 0.22 0. 0.33 0. A study of automobile accidents produced the following data: Model year 1997 1998 1999 Other Proportion of all vehicles 0.30 0. Determine the probability that the model year of this automobile is 1997 .46 Probability of involvement in an accident 0.16 0.

86 The number of days that elapse between the beginning of a calendar year and the moment a high-risk driver is involved in an accident is exponentially distributed.34 0. The hospital tests 30 randomly selected vials from a shipment and finds that one vial is ineffective. What portion of high-risk drivers are expected to be involved in an accident during the first 80 days of a calendar year? (A) (B) (C) (D) (E) 0.10 0.43 0. 0.14 0. What is the probability that this shipment came from Company X? (A) (B) (C) (D) (E) 29. 2% of the vials are ineffective.For Company X’s shipments.66 22 of 102 .15 0.57 0. For every other company. 10% of the vials are ineffective.63 0.37 0. An insurance company expects that 30% of high-risk drivers will be involved in an accident during the first 50 days of a calendar year.

C. Determine the maximum value of C for which the probability is less than 1% that the fund will be inadequate to cover all payments for high performance. An actuary has discovered that policyholders are three times as likely to file two claims as to file four claims. Each employee has a 2% chance of achieving a high performance level during the coming year. If the number of claims filed has a Poisson distribution.30. 1 2 2 4 A company establishes a fund of 120 from which it wants to pay an amount. independent of any other employee. (A) (B) (C) (D) (E) 24 30 40 60 120 23 of 102 . what is the variance of the number of claims filed? 1 3 (A) (B) (C) (D) (E) 31. to any of its 20 employees who achieve a high performance level during the coming year.

A large pool of adults earning their first driver’s license includes 50% low-risk drivers. 30% moderate-risk drivers.049 0. What is the probability that these 4 will contain at least two more high-risk drivers than low-risk drivers? (A) (B) (C) (D) (E) 0.073 24 of 102 .32. Because these drivers have no prior driving record. This month. and 20% high-risk drivers.012 0.018 0. an insurance company considers each driver to be randomly selected from the pool.006 0. the insurance company writes 4 new policies for adults earning their first driver’s license.

04 0. (A) (B) (C) (D) (E) 0.005(20 − x) for 0 < x < 20 f ( x) = ⎨ otherwise.94 25 of 102 .33. The lifetime of a machine part has a continuous distribution on the interval (0.47 0. The loss due to a fire in a commercial building is modeled by a random variable X with density function ⎧ 0.15 0.53 0. 40) with probability density function f. ⎩0 Given that a fire loss exceeds 8. Calculate the probability that the lifetime of the machine part is less than 6. where f (x) is proportional to (10 + x)− 2. what is the probability that it exceeds 16 ? (A) (B) (C) (D) (E) 1 25 1 9 1 8 1 3 3 7 34.

97 A group insurance policy covers the medical claims of the employees of a small company.000? (A) (B) (C) (D) (E) 0.000Y where Y is a random variable with density function ⎧k (1 − y ) 4 f ( y) = ⎨ ⎩0 for 0 < y < 1 otherwise. 0.000.03 0. given that V exceeds 10.42 0. The lifetime of a machine part has a continuous distribution on the interval (0. 40) with probability density function f. of the claims made in one year is described by V = 100. V.08 0.35. What is the conditional probability that V exceeds 40.17 0. where f (x) is proportional to (10 + x)− 2.20 0. What is the probability that the lifetime of the machine part is less than 5? (A) (B) (C) (D) (E) 36.51 26 of 102 .58 0. where k is a constant.13 0. The value.13 0.

The insured value.869 10.321 7. If the manufacturer sells 100 printers.256 12.358 7. The lifetime of a printer costing 200 is exponentially distributed with mean 2 years. 6. and a one-half refund if it fails during the second year.642 An insurance company insures a large number of homes. The manufacturer agrees to pay a full refund to a buyer if the printer fails during the first year following its purchase. what is the probability that it is insured for less than 2 ? (A) (B) (C) (D) (E) 0. Given that a randomly selected home is insured for at least 1. of a randomly selected home is assumed to follow a distribution with density function ⎧3 x −4 f ( x) = ⎨ ⎩0 for x > 1 otherwise.5.37.829 0. X.875 27 of 102 .704 0.578 0.684 0. how much should it expect to pay in refunds? (A) (B) (C) (D) (E) 38.

The number of hurricanes in any calendar year is independent of the number of hurricanes in any other calendar year. Given a random loss X.62 0. the probability of a hurricane is 0. 28 of 102 .06 0. The loss amount is modeled as a continuous random variable with density function ⎧2 x f ( x) = ⎨ ⎩0 for 0 < x < 1 otherwise. (A) (B) (C) (D) (E) 40.92 An insurance policy pays for a random loss X subject to a deductible of C.19 0. calculate the probability that there are fewer than 3 hurricanes in a 20-year period. where 0 < C < 1 .5 is equal to 0.64 .38 0. In any calendar year. there can be at most one hurricane. Using the company’s assumptions. A company prices its hurricane insurance using the following assumptions: (i) (ii) (iii) In any calendar year. the probability that the insurance payment is less than 0.39.05 . 0.

What is the probability that at least 9 participants complete the study in one of the two groups.4 0. but not in both groups? (A) (B) (C) (D) (E) 0.192 0.376 0.Calculate C. (A) (B) (C) (D) (E) 41.2 (independently of the other participants).6 0. Individual participants in the study drop out before the end of the study with probability 0.3 0.8 A study is being conducted in which the health of two independent groups of ten policyholders is being monitored over a one-year period of time.235 0.096 0.1 0.469 29 of 102 . 0.

000 and standard deviation 2.000 . For Company B there is a 70% chance that no claim is made during the coming year.185 0.240 30 of 102 . What is the probability that. Company B’s total claim amount will exceed Company A’s total claim amount? (A) (B) (C) (D) (E) 0. the total claim amount is normally distributed with mean 9.000 and standard deviation 2.180 0. If one or more claims are made. the total claim amount is normally distributed with mean 10.217 0.42. Assume that the total claim amounts of the two companies are independent. For Company A there is a 60% chance that no claim is made during the coming year.000 . If one or more claims are made.223 0. in the coming year.

43. The probability that one or more accidents will occur during any given month is 3 . 2. 4. is a discrete random variable with probability function ⎧6 − k ⎪ P ( X = k ) = ⎨ 15 ⎪0 ⎩ for k = 1.29 0. X. The number of accidents that occur in any given month 5 is independent of the number of accidents that occur in all other months.23 0. The number of days of hospitalization. A company takes out an insurance policy to cover accidents that occur at its manufacturing plant.3.5 otherwise.01 0. (A) (B) (C) (D) (E) 44.41 An insurance policy pays 100 per day for up to 3 days of hospitalization and 50 per day for each day of hospitalization thereafter. 31 of 102 . Calculate the probability that there will be at least four months in which no accidents occur before the fourth month in which at least one accident occurs. Determine the expected payment for hospitalization under this policy. 0.12 0.

123 210 220 270 367 Let X be a continuous random variable with density function ⎧x for − 2 ≤ x ≤ 4 ⎪ f ( x ) = ⎨10 ⎪0 otherwise.(A) (B) (C) (D) (E) 45. ⎩ Calculate the expected value of X. (A) (B) (C) (D) (E) 1 5 3 5 1 28 15 12 5 32 of 102 .

Since the device will not be monitored during its first two years of service. and it will pay 0. The time from purchase until failure of the equipment is exponentially distributed with mean 10 years. 2) . to failure of this device is exponentially distributed with mean 3 years. The insurance will pay an amount x if the equipment fails during the first year. A device that continuously measures and records seismic activity is placed in a remote region. T. 1 2 + e−6 3 2 − 2e −2 / 3 + 5e−4 / 3 (A) (B) (C) (D) (E) 47.46. At what level must x be set if the expected payment made under this insurance is to be 1000 ? (A) (B) (C) (D) (E) 3858 4449 5382 5644 7235 33 of 102 . the time to discovery of its failure is X = max(T.5x if failure occurs during the second or third year. 3 2 + 3e −2 / 3 5 A piece of equipment is being insured against early failure. Determine E[X]. The time. If failure occurs after the first three years. no payment will be made.

34 of 102 . is a discrete random variable with probability function ⎧6 − k ⎪ P ( X = k ) = ⎨ 15 ⎪0 ⎩ for k = 1.5 otherwise.4 . X. If the device has not failed by the beginning of any given year. An insurance policy on an electrical device pays a benefit of 4000 if the device fails during the first year. The number of days of hospitalization. 2234 2400 2500 2667 2694 An insurance policy pays an individual 100 per day for up to 3 days of hospitalization and 25 per day for each day of hospitalization thereafter.3. 4. The amount of the benefit decreases by 1000 each successive year until it reaches 0 . What is the expected benefit under this policy? (A) (B) (C) (D) (E) 49. Calculate the expected payment for hospitalization under this policy. the probability of failure during that year is 0. 2.48.

until the end of the year.347 10.(A) (B) (C) (D) (E) 50.000 7.231 8.000 for each one thereafter. The policy pays nothing for the first such snowstorm of the year and 10. 85 163 168 213 255 A company buys a policy to insure its revenue in the event of major snowstorms that shut down business. What is the expected amount paid to the company under this policy during a one-year period? (A) (B) (C) (D) (E) 2.578 35 of 102 . The number of major snowstorms per year that shut down business is assumed to have a Poisson distribution with mean 1.769 5.5 .

88 0.5 ⎪0 ⎩ for x > 0.84 0. 0. for N = 1. 5 and K a constant. . A manufacturer’s annual losses follow a distribution with density function ⎧ 2.51. The probability that the insured will incur a loss is 0. If there is a loss.05 . the probability of a loss of amount N is K .95 1. Determine the net premium for this policy. 36 of 102 .6 otherwise. To cover its losses. What is the mean of the manufacturer’s annual losses not paid by the insurance policy? (A) (B) (C) (D) (E) 52. the manufacturer purchases an insurance policy with an annual deductible of 2.93 0. .5(0. .00 An insurance company sells a one-year automobile policy with a deductible of 2 . These N are the only possible loss amounts and no more than one loss can occur.6) 2. .5 ⎪ f ( x) = ⎨ x3.

031 0. The policyholder’s loss. ⎩ for y > 1 otherwise.0 1.072 0. follows a distribution with density function: ⎧2 ⎪ f ( y) = ⎨ y 3 ⎪0.150 An insurance policy reimburses a loss up to a benefit limit of 10 .8 1.110 0.0 37 of 102 .(A) (B) (C) (D) (E) 53.3 1.066 0. What is the expected value of the benefit paid under the insurance policy? (A) (B) (C) (D) (E) 1. Y. 0.9 2.

An auto insurance company insures an automobile worth 15. If there is partial damage to the car. the amount X of damage (in thousands) follows a distribution with density function ⎧0.02 chance of a total loss of the car. Determine the company’s expected monthly claims. 320 328 352 380 540 An insurance company’s monthly claims are modeled by a continuous.54. positive random variable X.5003 e − x / 2 f ( x) = ⎨ ⎩0 for 0 < x < 15 otherwise.04 chance of partial damage to the car and a 0.000 for one year under a policy with a 1. 1 6 1 3 1 2 1 3 38 of 102 (A) (B) (C) (D) (E) . whose probability density function is proportional to (1 + x)−4. What is the expected claim payment? (A) (B) (C) (D) (E) 55. where 0 < x < ∞ .000 deductible. During the policy year there is a 0.

340 5.56. At what level must a deductible be set in order for the expected payment to be 25% of what it would be with no deductible? (A) (B) (C) (D) (E) 57.180 39 of 102 . (A) (B) (C) (D) (E) 1. 1000] .660 10.000 8.000 11. X. where X has a uniform distribution on [0. An insurance policy is written to cover a loss. (1 − 2500t ) 4 Determine the standard deviation of the claim size for this class of accidents. X. 250 375 500 625 750 An actuary determines that the claim size for a certain class of accidents is a random variable. with moment generating function MX(t) = 1 .

Calculate E(X3) .5 Let X represent the combined losses from the three cities. K.5 ML(t) = (1 – 2t)−4.760 8. it is reasonable to assume that the losses occurring in these cities are independent.000 10. A company insures homes in three cities. Since sufficient distance separates the cities.320 2. and L .58.560 40 of 102 . J. The moment generating functions for the loss distributions of the cities are: MJ(t) = (1 – 2t)−3 MK(t) = (1 – 2t)−2. (A) (B) (C) (D) (E) 1.082 5.

Calculate the difference between the 30th and 70th percentiles of X .5 ⎪0 ⎩ for x > 200 otherwise. is a random variable with density function ⎧ 2. An insurer's annual weather-related loss. 35 93 124 231 298 A recent study indicates that the annual cost of maintaining and repairing a car in a town in Ontario averages 200 with a variance of 260.5 ⎪ f ( x) = ⎨ x 3. (A) (B) (C) (D) (E) 60. If a tax of 20% is introduced on all items associated with the maintenance and repair of cars (i.5 ( 200 )2.e.59. X. what will be the variance of the annual cost of maintaining and repairing a car? (A) (B) (C) (D) (E) 208 260 270 312 374 41 of 102 .. everything is made 20% more expensive).

An insurer's annual weather-related loss. (A) (B) (C) (D) (E) 62. 124 148 167 224 298 A random variable X has the cumulative distribution function ⎧0 ⎪ 2 ⎪ x − 2x + 2 F ( x) = ⎨ 2 ⎪ ⎪1 ⎩ for x < 1 for 1 ≤ x < 2 for x ≥ 2.61. X. Calculate the variance of X. (A) (B) (C) (D) (E) 7 72 1 8 5 36 4 3 23 12 42 of 102 .5 ⎪0 ⎩ for x > 200 otherwise. is a random variable with density function ⎧ 2. Calculate the difference between the 25th and 75th percentiles of X .5 ( 200 )2.5 ⎪ f ( x) = ⎨ x 3.

The machine’s age at failure.15 0. X.63. The warranty on a machine specifies that it will be replaced at failure or age 4.05 0.10 0. Let Y be the age of the machine at the time of replacement. has density function ⎧ 1 ⎪ f ( x) = ⎨ 5 ⎪0 ⎩ for 0 < x < 5 otherwise.4 1.10 0.7 2. (A) (B) (C) (D) (E) 64.10 0.20 0. whichever occurs first. 1.30 What percentage of the claims are within one standard deviation of the mean claim size? 43 of 102 .5 A probability distribution of the claim sizes for an auto insurance policy is given in the table below: Claim Size 20 30 40 50 60 70 80 Probability 0. Determine the variance of Y.1 7.3 1.

(A) (B) (C) (D) (E) 361 403 433 464 521 44 of 102 . 1500) . Determine the standard deviation of the insurance payment in the event that the automobile is damaged. repair costs can be modeled by a uniform random variable on the interval (0. 45% 55% 68% 85% 100% The owner of an automobile insures it against damage by purchasing an insurance policy with a deductible of 250 .(A) (B) (C) (D) (E) 65. In the event that the automobile is damaged.

The four bids are regarded as four independent random variables with common cumulative distribution function F ( x) = 1 (1 + sin π x ) 2 for 3 5 ≤x≤ . 2 2 Which of the following represents the expected value of the accepted bid? (A) π 5/ 2 3/ 2 ∫ x cos π x dx 5/ 2 (B) 1 4 ∫2 (1 + sin π x ) dx 16 3/ 1 4 ∫2 x (1 + sin π x ) dx 16 3/ 1 3 π ∫ cos π x (1 + sin π x ) dx 4 3/ 2 1 3 π ∫ x cos π x (1 + sin π x ) dx 4 3/ 2 5/ 2 5/ 2 5/ 2 (C) (D) (E) 45 of 102 .66. A company agrees to accept the highest of four sealed bids on a property.

If it rains on April 1.6 . The policy will pay 1000 for each day. What is the standard deviation of the amount the insurance company will have to pay? (A) (B) (C) (D) (E) 668 699 775 817 904 68. the game is postponed and will be played on the next day that it does not rain. that the opening game is postponed. up to 2 days. up to a maximum benefit of 250 .004 x for x ≥ 0 ⎪ f ( x) = ⎨ otherwise. Calculate the median benefit for this policy. An insurance policy reimburses dental expense. ⎪0 ⎩ where c is a constant. The team purchases insurance against rain. The probability density function for X is: ⎧ce −0. 46 of 102 .67. A baseball team has scheduled its opening game for April 1. The insurance company determines that the number of consecutive days of rain beginning on April 1 is a Poisson random variable with mean 0. X.

(A) (B) (C) (D) (E) 69.57 47 of 102 . (A) (B) (C) (D) (E) 0. 161 165 173 182 250 The time to failure of a component in an electronic device has an exponential distribution with a median of four hours.07 0.42 0. Calculate the probability that the component will work without failing for at least five hours.38 0.29 0.

The resulting cost to the company is Y = T 2 . What is the 95th percentile of actual losses that exceed the deductible? (A) (B) (C) (D) (E) 71. subject to a deductible of 100 . Losses incurred follow an exponential distribution with mean 300. An insurance company sells an auto insurance policy that covers losses incurred by a policyholder. T. 600 700 800 900 1000 The time. 48 of 102 . that a manufacturing system is out of operation has cumulative distribution function ⎧ ⎛ 2 ⎞2 ⎪1 − F (t ) = ⎨ ⎜ t ⎟ ⎝ ⎠ ⎪0 ⎩ for t > 2 otherwise.70. Determine the density function of Y. for y > 4 .

Determine the cumulative distribution function.000 − 10. An investment account earns an annual interest rate R that follows a uniform distribution on the interval ( 0.04.000 − 0. 000 ⎠ ⎦ (D) (E) 49 of 102 . 408 10. 0. 000e R . F ( v ) . 000ev /10. 408 25 v ⎡ ⎛ v ⎞ ⎤ 25 ⎢ln ⎜ ⎟ − 0.000 initial investment in this account after one year is given by V = 10.04 ⎥ ⎣ ⎝ 10.08 ) .833 − 10. The value of a 10.04 (B) (C) v − 10. 408 425 25ev /10. (A) 10. of V for values of v that satisfy 0 < F (v) < 1.(A) 4 y2 8 y 3/ 2 8 y3 16 y 1024 y5 (B) (C) (D) (E) 72.

2e − (0.8. where X is an exponential random variable with mean 1 year.2 e −10 y 0.125(0.2 8 y −0. Let R denote the average rate.25 e −0.25 0.73. of the random variable Y. An actuary models the lifetime of a device using the random variable Y = 10X 0. at which the representative responds to inquiries. in customers per minute. Determine the probability density function f (y). (A) (B) (C) (D) (E) 10 y 0.1 y ) 1.125(0. for y > 0.1y )0.1 y ) 0.1 y ) 1.8 8 y −0.1y )1.25 74. Let T denote the time in minutes for a customer service representative to respond to 10 telephone inquiries. Which of the following is the density function of the random variable R on the interval F 10 ≤ r ≤ 10 I ? H 12 8 K (A) (B) (C) 12 5 3− 5 2r 5 ln(r ) 2 3r − 50 of 102 .25 e − (0. T is uniformly distributed on the interval with endpoints 8 minutes and 12 minutes.8e −8 y −0.25 (0.

Company II has a monthly profit that is twice that of Company I. (A) (B) (C) (D) (E) 1 2 ⎛ x⎞ f⎜ ⎟ ⎝2⎠ ⎛ x⎞ f⎜ ⎟ ⎝2⎠ ⎛ x⎞ 2f ⎜ ⎟ ⎝2⎠ 2 f ( x) 2 f (2 x) 76. 51 of 102 .(D) (E) 10 r2 5 2r 2 75. The monthly profit of Company I can be modeled by a continuous random variable with density function f . Claim amounts for wind damage to insured homes are independent random variables with common density function ⎧ 3 ⎪ f ( x ) = ⎨ x4 ⎪0 ⎩ for x >1 otherwise where x is the amount of a claim in thousands. Determine the probability density function of the monthly profit of Company II. Suppose 3 such claims will be made.

875 52 of 102 . is f ( x.391 0. at which point the device stops running.What is the expected value of the largest of the three claims? (A) (B) (C) (D) (E) 77. 2025 2700 3232 3375 4500 A device runs until either of two components fails.141 0. both measured in hours. y ) = x+ y for 0 < x < 2 and 0 < y < 2 . The joint density function of the lifetimes of the two components.125 0. 8 What is the probability that the device fails during its first hour of operation? (A) (B) (C) (D) (E) 0.625 0.

5 0. is f ( s. 0. 27 Calculate the probability that the device fails during its first hour of operation. measured in hours.44 0. at which point the device stops running. The joint density function of the lifetimes of the two components. t ) ds dt ∫ ∫ f ( s.5 (C) 0. t ) ds dt 0 0 (B) ∫ ∫ f ( s. What is the probability that the device fails during the first half hour of operation? (A) 0. The device fails if either component fails. t ) ds dt 0 0 1 1 (D) + ∫ ∫ f ( s.5 0.59 0.5 53 of 102 . t ) . The joint density function of the lifetimes of the components.5 ∫ ∫ f ( s. (A) (B) (C) (D) (E) 79. where 0 < s < 1 and 0 < t < 1 .04 0.5 0.41 0. t ) ds dt 0 0 1 0. y ) = x+ y for 0 < x < 3 and 0 < y < 3 . is f ( x. both measured in hours.78. t ) ds dt 0 0 1 0.5 1 ∫ ∫ f ( s.96 A device contains two components. A device runs until either of two components fails.

000 ? (A) (B) (C) (D) (E) 0. What is the probability that the average of 25 randomly selected claims exceeds 20.15 0.400 and standard deviation 5.343. Contributions are assumed to be independent and identically distributed with mean 3125 and standard deviation 250.01 0.977.5 ∫ ∫ f ( s.784.338.328.(E) 0. (A) (B) (C) (D) (E) 81. Calculate the approximate 90th percentile for the distribution of the total contributions received. t ) ds dt 0 0 1 0.000 6. 6. A charity receives 2025 contributions.000.5 1 + ∫ ∫ f ( s.45 54 of 102 .000 6.000 6.33 0.000 6.000 Claims filed under auto insurance policies follow a normal distribution with mean 19. t ) ds dt 0 0.5 80.27 0.

82 0.87 0.95 1. What is the smallest number of bulbs to be purchased so that the succession of light bulbs produces light for at least 40 months with probability at least 0. The number of claims filed by a policyholder under a vision care insurance policy during one year is a Poisson random variable with mean 2.82. 0.68 0.00 A company manufactures a brand of light bulb with a lifetime in months that is normally distributed with mean 3 and variance 1 . What is the approximate probability that there is a total of between 2450 and 2600 claims during a one-year period? (A) (B) (C) (D) (E) 83.9772? (A) (B) (C) (D) (E) 14 16 20 40 55 55 of 102 . A consumer buys a number of these bulbs with the intention of replacing them successively as they burn out. An insurance company issues 1250 vision care insurance policies. Assume the numbers of claims filed by distinct policyholders are independent of one another. The light bulbs have independent lifetimes.

Let X and Y be the number of hours that a randomly selected person watches movies and sporting events.62 0. (A) (B) (C) (D) (E) 0. The following information is known about X and Y: E( X ) E (Y ) Var ( X ) Var (Y ) = 50 = 20 = 50 = 30 Cov ( X .92 0.87 0.84. Let T be the total number of hours that these one hundred people watch movies or sporting events during this three-month period.97 56 of 102 .84 0. Y ) = 10 One hundred people are randomly selected and observed for these three months. during a three-month period. Approximate the value of P(T < 7100). respectively.

57 of 102 . 1000 The premium for the policy is set at 100 over the expected total claim amount.333 0. a second pension will be provided for her husband. If 100 policies are sold.85. 0. The total claim amount for a health insurance policy follows a distribution with density function f ( x) = 1 −( x /1000) e for x > 0 .4 probability of remaining with the police force until retirement. Given that a new recruit reaches retirement with the police force.25 . what is the approximate probability that the insurance company will have claims exceeding the premiums collected? (A) (B) (C) (D) (E) 86.407 0. the probability that she is not married at the time of retirement is 0. if the new hire is married at the time of her retirement.001 0.460 A city has just added 100 new female recruits to its police force. A consulting actuary makes the following assumptions: (i) (ii) Each new recruit has a 0. In addition.159 0. The city will provide a pension to each new hire who remains with the force until retirement.

(A) (B) (C) (D) (E) 87.88 58 of 102 .5 years to 2. The difference between the true age and the rounded age is assumed to be uniformly distributed on the interval from −2.57 0.5 years. ages have been rounded to the nearest multiple of 5 years.25 years of the mean of the true ages? (A) (B) (C) (D) (E) 0.14 0. The healthcare data are based on a random sample of 48 people.93 0.77 0.67 0.75 0.99 In an analysis of healthcare data. Determine the probability that the city will provide at most 90 pensions to the 100 new hires and their husbands.(iii) The number of pensions that the city will provide on behalf of each new hire is independent of the number of pensions it will provide on behalf of any other new hire.60 0.38 0. What is the approximate probability that the mean of the rounded ages is within 0. 0.

88. y ) = ⎨125. What is the probability that the first claim from a good driver will be filed within 3 years and the first claim from a bad driver will be filed within 2 years? (A) (B) (C) (D) (E) 1 1 − e −2 / 3 − e −1/ 2 + e −7 / 6 18 d i 1 −7 / 6 e 18 1 − e −2 / 3 − e −1/ 2 + e −7/ 6 1 − e −2 / 3 − e −1/ 2 + e −1/ 3 1 1 1 1 − e −2 / 3 − e −1/ 2 + e −7 / 6 3 6 18 89. The waiting time for the first claim from a good driver and the waiting time for the first claim from a bad driver are independent and follow exponential distributions with means 6 years and 3 years. respectively. 000 ⎪0 ⎩ for 0 < x < 50 − y < 50 otherwise. The future lifetimes (in months) of two components of a machine have the following joint density function: ⎧ 6 (50 − x − y ) ⎪ f ( x. What is the probability that both components are still functioning 20 months from now? 59 of 102 .

400 0. 000 ∫ 0 20 20 ∫ (50 − x − y)dydx 0 (B) 6 ∫ 125. 000 20 6 ∫ 125. 000 20 50 30 50 − x 20 ∫ (50 − x − y )dydx (C) 30 50 − x − y 20 50 − x ∫ (50 − x − y )dydx (D) 6 ∫ 125. What is the probability that the next claim will be a Deluxe Policy claim? (A) (B) (C) (D) (E) 0.500 60 of 102 . 000 20 20 ∫ (50 − x − y )dydx (E) 50 50 − x − y 20 ∫ (50 − x − y )dydx 90. The time until the next Basic Policy claim is an exponential random variable with mean two days.487 0. An insurance company sells two types of auto insurance policies: Basic and Deluxe.172 0.(A) 6 125. 000 20 6 ∫ 125.223 0. The time until the next Deluxe Policy claim is an independent exponential random variable with mean three days.

Determine the probability that the company considers the two bids further. The bids must be between 2000 and 2200 .33 0. (A) (B) (C) (D) (E) 0.38 0.41 0. Otherwise.71 0. X and Y have joint density function ⎧ 2x + 2 − y ⎪ f ( x.20 0. Assume that the two bids are independent and are both uniformly distributed on the interval from 2000 to 2200. the company will consider the two bids further.75 Two insurers provide bids on an insurance policy to a large company.41 0.60 61 of 102 .19 0. 0.10 0. An insurance company insures a large number of drivers. The company decides to accept the lower bid if the two bids differ by 20 or more. and let Y represent the company’s losses under liability insurance.91. y ) = ⎨ 4 ⎪0 ⎩ for 0 < x < 1 and 0 < y < 2 otherwise. Let X be the random variable representing the company’s losses under collision insurance. What is the probability that the total loss is at least 1 ? (A) (B) (C) (D) (E) 92.

(A) (B) (C) (D) (E) 4. is constant over the region 0 < t1 < 6. t1 + t2 < 10. A family buys two policies from the same insurance company.32 0.7 6. The family experiences exactly one loss under each policy. (A) (B) (C) (D) (E) 94. Let T2 be the time between the report of the claim and payment of the claim. Calculate the probability that the total benefit paid to the family does not exceed 5. f (t1 .9 5. the expected time between a car accident and payment of the claim. and zero otherwise.30 0.0 6.42 Let T1 be the time between a car accident and reporting a claim to the insurance company.93.0 5. The joint density function of T1 and T2.13 0. t2 ) .25 0. One policy has a deductible of 1 and the other has a deductible of 2. 0< t2 < 6. Determine E[T1 + T2]. 0.7 62 of 102 . Losses under the two policies are independent and have continuous uniform distributions on the interval from 0 to 10.

The probability that an individual tourist will not show up is 0. Determine the joint moment generating function.95. so he sells 21 tickets. M ( t1 . Let W = X + Y and Z = Y − X . and is non-refundable if a tourist fails to show up.02. of W and Z . X and Y are independent random variables with common moment generating function M ( t ) = et 2 /2 . What is the expected revenue of the tour operator? 63 of 102 . t2 ) . (A) (B) (C) (D) (E) 96. Each ticket costs 50. The operator knows that tourists may not show up. e 2 t1 + 2 t2 e(t1 −t2 ) e(t1 + t2 ) 2 2 2 2 e 2t1t2 e t1 + t2 2 2 A tour operator has a bus that can accommodate 20 tourists. independent of all other tourists. If a tourist shows up and a seat is not available. the tour operator has to pay 100 (ticket cost + 50 penalty) to the tourist.

The joint density function for T1 and T2 is uniform over the region defined by 0 ≤ t1 ≤ t2 ≤ L where L is a positive constant.(A) (B) (C) (D) (E) 97. (A) L2 3 L2 2 2 L2 3 3 L2 4 L2 (B) (C) (D) (E) 64 of 102 . Determine the expected value of the sum of the squares of T1 and T2 . 935 950 967 976 985 Let T1 and T2 represent the lifetimes in hours of two linked components in an electronic device.

98. An insurance policy pays a total medical benefit consisting of two parts for each claim. the variance of Y is 10. Let X1. 19 8 t + e 27 27 1 + 2et ⎛1 2 t ⎞ ⎜ + e ⎟ ⎝3 3 ⎠ 3 (A) (B) (C) (D) (E) 1 8 + e3t 27 27 1 2 3t + e 3 3 99.000. X3 be a random sample from a discrete distribution with probability function ⎧ ⎪ ⎪ ⎪ p ( x) = ⎨ ⎪ ⎪ ⎪ ⎩ 1 3 2 3 0 for x = 0 for x = 1 otherwise Determine the moment generating function. X + Y . Let X represent the part of the benefit that is paid to the surgeon. of Y = X1X2X3 . M(t).000. and the variance of the total benefit. 65 of 102 . The variance of X is 5000. is 17. X2. the company that issues the policy decides to increase X by a flat amount of 100 per claim and to increase Y by 10% per claim. and let Y represent the part that is paid to the hospital. Due to increasing medical costs.

or 2 luxury cars on any day. When selling a car.300 19. Y = 0) = P(X = 1.Calculate the variance of the total benefit after these revisions have been made. (A) (B) (C) (D) (E) 100.520 20. P(X = 0. Y = 1) = P(X = 2. the dealer also tries to persuade the customer to buy an extended warranty for the car. Let X denote the number of luxury cars sold in a given day. and let Y denote the number of extended warranties sold. Y = 0) = P(X = 1. Y = 0) = P(X = 2. Y = 2) = 1 6 1 12 1 6 1 12 1 3 1 6 What is the variance of X? 66 of 102 .670 A car dealership sells 0.200 18. Y = 1) = P(X = 2.800 19. 18. 1.

58 0.(A) (B) (C) (D) (E) 0.58 101. The profit for a new product is given by Z = 3X – Y − 5 .83 1.42 2.47 0. X and Y are independent random variables with Var(X) = 1 and Var(Y) = 2. What is the variance of Z? (A) (B) (C) (D) (E) 1 5 7 11 16 67 of 102 .

10 20 50 100 200 In a small metropolitan area. What is the variance of the total time that the generators produce electricity? (A) (B) (C) (D) (E) 103.159 0. The company will begin using the second generator immediately after the first one fails.4 .050 0. fire.414 68 of 102 .5.0. The time until failure for each generator follows an exponential distribution with mean 10.287 0.102. and theft are assumed to be independent. 1. Determine the probability that the maximum of these losses exceeds 3. A company has two electric generators. annual losses due to storm. and 2.002 0. exponentially distributed random variables with respective means 1. (A) (B) (C) (D) (E) 0.

A joint density function is given by ⎧ kx f ( x. x ≤ y ≤ 2 x otherwise.Y) ? (A) (B) (C) (D) (E) − 1 6 0 1 9 1 6 2 3 105. 69 of 102 . y ) = ⎨ ⎩0 for 0 < x < 1. What is Cov(X. where k is a constant. Calculate the covariance of X and Y. Let X and Y be continuous random variables with joint density function ⎧8 ⎪ xy f ( x. 0 < y < 1 otherwise.104. y ) = ⎨ 3 ⎪0 ⎩ for 0 ≤ x ≤ 1.

(A) (B) (C) (D) (E) 0 4 6 12 24 70 of 102 .24 Let X and Y denote the values of two stocks at the end of a five-year period. Given X = x. 0. Determine Cov(X.80 1. x). Y is uniformly distributed on the interval (0. X is uniformly distributed on the interval (0. Y) according to this model.25 0. 12) .67 0.(A) (B) (C) (D) (E) 106.04 0.

Let X denote the size of a surgical claim and let Y denote the size of the associated hospital claim. t > 0 .60 9. and let C2 denote the size of the combined claims after the application of that surcharge. (A) (B) (C) (D) (E) 108. X. E(Y 2) = 51.52 12. An actuary is using a model in which E(X) = 5.4. of these components are independent with common density function f (t) = e−t. C2).4. and Var(X+Y) = 8. T1 and T2.32 A device containing two key components fails when. Calculate Cov(C1.76 11. The cost. Let C1 = X+Y denote the size of the combined claims before the application of a 20% surcharge on the hospital portion of the claim.80 9.107. E(Y) = 7. 8. E(X 2) = 27. Which of the following is the density function of X for x > 0 ? (A) (B) (C) e−x/2 – e−x 2 ( e− x / 2 − e− x ) x 2e − x 2 71 of 102 . and only when. of operating the device until failure is 2T1 + T2 . both components fail. The lifetimes.

Premiums and claims are independent.(D) (E) e − x /2 2 e − x /3 3 109. Annual claims are modeled by an exponential random variable with mean 1. 1 2x +1 2 (2 x + 1)2 e− x 2e−2 x xe− x Let X and Y be continuous random variables with joint density function ⎧24 xy for 0 < x < 1 and 0 < y < 1 − x f ( x. Annual premiums are modeled by an exponential random variable with mean 2. y ) = ⎨ otherwise. A company offers earthquake insurance. Let X denote the ratio of claims to premiums. What is the density function of X? (A) (B) (C) (D) (E) 110. ⎩0 72 of 102 .

When the claim is finally settled. 3⎦ ⎣ (A) (B) (C) (D) (E) 1 27 2 27 1 4 1 3 4 9 111. to the claimant. The company has determined that X and Y have the joint density function f ( x. of the amount it will pay to the claimant for the fire loss. 73 of 102 .1⎤ ⎡ Calculate P ⎢Y < X X = ⎥ . the company makes an initial estimate. X. Once a fire is reported to a fire insurance company. the company pays an amount. Given that the initial claim estimated by the company is 2. determine the probability that the final settlement amount is between 1 and 3 . y > 1 . Y. y ) = 2 y − (2 x −1) ( x −1) x ( x − 1) 2 x > 1.

(A) (B) (C) (D) (E) 1 9 2 9 1 3 2 3 8 9 112. Given that 10% of the employees buy the basic policy. what is the probability that fewer than 5% buy the supplemental policy? (A) (B) (C) (D) (E) 0. and Y the proportion of employees who purchase the supplemental policy. A company offers a basic life insurance policy to its employees. Let X denote the proportion of employees who purchase the basic policy. as well as a supplemental life insurance policy. Let X and Y have the joint density function f(x.013 0.010 0.500 74 of 102 . To purchase the supplemental policy. an employee must first purchase the basic policy.y) = 2(x + y) on the region where the density is positive.108 0.417 0.

025. given that the husband survives at least ten years? (A) (B) (C) (D) (E) 114.800 P(X = 1.96 . Y = 0) = 0. 350 385 397 870 897 A diagnostic test for the presence of a disease has two possible outcomes: 1 for disease present and 0 for disease not present. Y = 1) = 0.125 75 of 102 . one for each person. and let Y denote the outcome of the diagnostic test.01. each with a death benefit of 10.050 P(X = 0. What is the expected excess of premiums over claims. The probability that only the wife will survive at least ten years is 0. and the probability that both of them will survive at least ten years is 0. The policies will expire at the end of the tenth year. are sold to a couple.113. the probability that only the husband will survive at least ten years is 0. Y = 1) = 0. Y = 0) = 0.000 and a one-time premium of 500. Let X denote the disease state of a patient.025 P(X = 1. Two life insurance policies. The joint probability function of X and Y is given by: P(X = 0.

Calculate Var(Y X = 1) .15 0.20 0. (A) (B) (C) (D) (E) 115.13 0. What is the conditional variance of Y given that X = x ? (A) (B) (C) (D) (E) 1 12 7 6 x+ x2 − 1 2 1 6 1 3 x2 + x + 76 of 102 .51 0. x < y < x + 1 otherwise. 0.71 The stock prices of two companies at the end of any given year are modeled with random variables X and Y that follow a distribution with joint density function ⎧ 2x f ( x. y ) = ⎨ ⎩0 for 0 < x < 1.

given that there are no tornadoes in county P. y ) = ⎨ ⎪0 ⎩ for x > 0.13 0. (A) (B) (C) (D) (E) 117.15 0.05 1 0.88 0.02 Calculate the conditional variance of the annual number of tornadoes in county Q.10 3 0.15 2 0. x + y < 1 otherwise. Let X be the portion of a claim representing damage to the house and let Y be the portion of the same claim representing damage to the rest of the property.76 A company is reviewing tornado damage claims under a farm insurance policy. An actuary determines that the annual numbers of tornadoes in counties P and Q are jointly distributed as follows: Annual number of tornadoes in county Q Annual number of tornadoes in county P 0 1 2 0 0.03 0.51 0. 0.84 0.99 1.05 0. Determine the probability that the portion of a claim representing damage to the house is less than 0.116.2 .06 0.12 0. y > 0.12 0. The joint density function of X and Y is ⎧ ⎪ 6 [1 − ( x + y )] f ( x.02 0. 77 of 102 .

(A) (B) (C) (D) (E) 118. y ) = ⎨ otherwise. ⎩0 Let g be the marginal density function of Y.480 0. Which of the following represents g? (A) ⎧15 y for 0 < y < 1 g ( y) = ⎨ otherwise ⎩0 ⎧15 y 2 for x 2 < y < x ⎪ g ( y) = ⎨ 2 ⎪0 otherwise ⎩ ⎧15 y 2 for 0 < y < 1 ⎪ g ( y) = ⎨ 2 ⎪0 otherwise ⎩ ⎧15 y 3/ 2 (1 − y1/ 2 ) for x 2 < y < x ⎪ g ( y) = ⎨ otherwise ⎪0 ⎩ ⎧15 y 3/ 2 (1 − y1/ 2 ) for 0 < y < 1 ⎪ g ( y) = ⎨ otherwise ⎪0 ⎩ (B) (C) (D) (E) 78 of 102 .360 0.488 0.512 0.520 Let X and Y be continuous random variables with joint density function ⎧15 y for x 2 ≤ y ≤ x f ( x. 0.

119. The size of the payment for damage to the policyholder’s car. what is the probability that the payment for damage to the other driver’s car will be greater than 0. has a marginal density function of 1 for 0 < x < 1 . X. has conditional density of 1 for x < y < x + 1 . Y.500 ? (A) (B) (C) (D) (E) 3 8 1 2 3 4 7 8 15 16 79 of 102 . the size of the payment for damage to the other driver’s car. Given X = x. An auto insurance policy will pay for damage to both the policyholder’s car and the other driver’s car in the event that the policyholder is responsible for an accident. If the policyholder is responsible for an accident.

Calculate the probability that a randomly chosen claim on this policy is processed in three hours or more. The time (in hours) to process a claim of size x. An insurance policy is written to cover a loss X where X has density function ⎧3 2 ⎪ x f ( x) = ⎨ 8 ⎪0 ⎩ for 0 ≤ x ≤ 2 otherwise.25 0.32 0. Let Y represent the length of time the owner has insured the automobile at the time of the accident.120. (A) (B) (C) (D) (E) 121. where 0 ≤ x ≤ 2. 0. X and Y have joint probability density function 80 of 102 .17 0.58 0. is uniformly distributed on the interval from x to 2x.83 Let X represent the age of an insured automobile involved in an accident.

(A) (B) (C) (D) (E) 122. y ) = ⎨ 64 ⎪ otherwise. The device fails when and only when the second circuit fails. ⎩0 What is the expected time at which the device fails? 81 of 102 . y ) = ⎨ otherwise. so the second is used only when the first has failed. 4.0 6.⎧ 1 10 − xy 2 ) for 2 ≤ x ≤ 10 and 0 ≤ y ≤ 1 ⎪ ( f ( x. Let X and Y be the times at which the first and second circuits fail.4 A device contains two circuits. respectively. The second circuit is a backup for the first.8 6. X and Y have joint probability density function ⎧6e − x e −2 y for 0 < x < y < ∞ f ( x.9 5. ⎩0 Calculate the expected age of an insured automobile involved in an accident.2 5.

(A) (B) (C) (D) (E)

123.

0.33 0.50 0.67 0.83 1.50

You are given the following information about N, the annual number of claims for a randomly selected insured:

1 2 1 P ( N = 1) = 3 1 P ( N > 1) = 6 P ( N = 0) =

Let S denote the total annual claim amount for an insured. When N = 1, S is exponentially distributed with mean 5 . When N > 1, S is exponentially distributed with mean 8 .

Determine P(4 < S < 8).

(A) (B) (C) (D) (E)

0.04 0.08 0.12 0.24 0.25

82 of 102

124.

**The joint probability density for X and Y is
**

⎧2e − ( x + 2 y ) , f ( x, y ) = ⎨ ⎩0, for x > 0, y > 0 otherwise.

Calculate the variance of Y given that X > 3 and Y > 3 .

(A) (B) (C) (D) (E)

125.

0.25 0.50 1.00 3.25 3.50

The distribution of Y , given X , is uniform on the interval [0, X]. The marginal density of X is ⎧2 x , f ( x) = ⎨ ⎩0, for 0 < x < 1 otherwise.

**Determine the conditional density of X , given Y = y, where positive. (A) (B) (C) (D) 1 2
**

2x

1 y 1 1− y

(E)

83 of 102

126.

Under an insurance policy, a maximum of five claims may be filed per year by a policyholder. Let pn be the probability that a policyholder files n claims during a given year, where n = 0, 1, 2, 3, 4, 5 . An actuary makes the following observations: i) ii) iii) pn ≥ pn +1 for n = 0, 1, 2, 3, 4 . The difference between pn and pn +1 is the same for n = 0, 1, 2, 3, 4 . Exactly 40% of policyholders file fewer than two claims during a given year. Calculate the probability that a random policyholder will file more than three claims during a given year. (A) (B) (C) (D) (E) 0.14 0.16 0.27 0.29 0.33

127.

Automobile losses reported to an insurance company are independent and uniformly distributed between 0 and 20,000. The company covers each such loss subject to a deductible of 5,000. Calculate the probability that the total payout on 200 reported losses is between 1,000,000 and 1,200,000. (A) (B) (C) (D) (E) 0.0803 0.1051 0.1799 0.8201 0.8575

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F ( x) = ⎨ ⎪0.128. 7% 10% 16% 25% 28% The cumulative distribution function for health care costs experienced by a policyholder is modeled by the function x − ⎧ ⎪1 − e 100 . 11% of the clients have homeowners insurance. Let G be the cumulative distribution function of reimbursements given that the reimbursement is positive. 85 of 102 . homeowners insurance and renters insurance. ⎩ for x > 0 otherwise. The policy has a deductible of 20. 35% of the clients have two of these three products. An insurer reimburses the policyholder for 100% of health care costs between 20 and 120 less the deductible. Health care costs above 120 are reimbursed at 50%. Calculate G(115). (A) (B) (C) (D) (E) 129. Calculate the percentage of the agent’s clients that have both auto and renters insurance. but not auto insurance. Twice as many of the clients have homeowners insurance as have renters insurance. The profile of the agent’s clients is as follows: i) ii) iii) iv) v) 17% of the clients have none of these three products. An insurance agent offers his clients auto insurance. The purchase of homeowners insurance and the purchase of renters insurance are mutually exclusive. 64% of the clients have auto insurance.

(A) (B) (C) (D) (E) 12.9 70.0 41.727 0. 2 M X (t ) = Calculate the expected value of this piece of equipment after three years of use.7 83.777 The value of a piece of factory equipment after three years of use is 100(0. 0.(A) (B) (C) (D) (E) 130.683 0.5)X where X is a random variable having moment generating function 1 . 1 − 2t 1 for t < .5 25.741 0.757 0.8 86 of 102 .

..125 87 of 102 .105 0.131. 2. A store has 80 modems in its inventory. 8% are defective. 3.. 3. ⎩ ( ) n 2 −1 .. Let N1 and N 2 represent the numbers of claims submitted to a life insurance company in April and May.. (A) (B) (C) (D) (E) 0. Of the modems from Source A. (A) 3 2 ( e − 1) 16 3 2 e 16 3e 4−e (B) (C) (D) (E) e2 − 1 e2 132. respectively.078 0. Of the modems from Source B. otherwise. The joint probability function of N1 and N 2 is ⎧ 3 ⎛ 1 ⎞ n 1−1 − n −n 1 1 ⎪ p (n1 . and n2 = 1. for n1 = 1.010 0. Calculate the probability that exactly two out of a random sample of five modems from the store’s inventory are defective. 20% are defective. Calculate the expected number of claims that will be submitted to the company in May if exactly 2 claims were submitted in April.. 2.102 0. 30 coming from Source A and the remainder from Source B. n2 ) = ⎨ 4 ⎜ 4 ⎟ e 1 − e ⎝ ⎠ ⎪0.

80 0. of a male born the same year as the insured has the cumulative distribution function for t ≤ 0 ⎧ 0.95 88 of 102 .12 0. ⎪ 1−1. A man purchases a life insurance policy on his 40th birthday. (A) (B) (C) (D) (E) 333 348 421 549 574 134. Calculate the probability that the next mattress sold is either king or queen-size. ⎩ Calculate the expected payment to the man under this policy.85 0. The policy will pay 5000 only if he dies before his 50th birthday and will pay 0 otherwise. in years.133.15 0. queen and twin-size mattresses. Sales records at the store indicate that one-fourth as many queen-size mattresses are sold as king and twinsize mattresses combined. Records also indicate that three times as many king-size mattresses are sold as twin-size mattresses. A mattress store sells only king.1t F (t ) = ⎨ ⎪1 − e 1000 . The length of lifetime. for t > 0. (A) (B) (C) (D) (E) 0.

Calculate Var (N). Let X be the number of rolls needed to obtain a 5 and Y the number of rolls needed to obtain a 6. occurring in a factory on any given day is Poisson distributed with mean λ. The parameter λ is a random variable that is determined by the level of activity in the factory.50 2. A fair die is rolled repeatedly.25 136. (A) (B) (C) (D) (E) 5.6 6. The number of workplace injuries.135. and is uniformly distributed on the interval [0.2 6. Calculate E ( X Y = 2) .0 6. (A) (B) (C) (D) (E) λ 2λ 0.0 5.8 89 of 102 .75 1. 3]. N.

09e 2t .137.33 0.09e −2t + 0. Let X and Y be identically distributed independent random variables such that the moment generating function of X +Y is M (t ) = 0.67 0.70 90 of 102 . for − ∞ < t < ∞.24e t + 0.50 0.34 0. Calculate P[X ≤ 0].34 + 0.24e −t + 0. (A) (B) (C) (D) (E) 0.

7 91 of 102 . A machine consists of two components. x + y < 10 otherwise.0 6.7 2. Calculate the expected operational time of the machine. f ( x. (A) (B) (C) (D) (E) 1.3 5.5 3. whose lifetimes have the joint density function ⎧1 ⎪ .138. y > 0. y ) = ⎨ 50 ⎪0. ⎩ for x > 0. The machine operates until both components fail.

1]. given that the total loss due to hospitalizations from the accident is less than 1. the losses are independent. The occurrences of damage in different hurricanes are independent. Each of them independently has probability 0.3 of being hospitalized. Calculate the mode of the number of hurricanes it takes for the home to experience damage from two hurricanes.510 0.4 probability of experiencing damage.139. (A) (B) (C) (D) (E) 0.800 140. Calculate the expected number of people in the car who are hospitalized.534 0. Each time a hurricane arrives. the loss is uniformly distributed on [0. a new home has a 0. When a hospitalization occurs. A driver and a passenger are in a car accident.628 0.600 0. (A) (B) (C) (D) (E) 2 3 4 5 6 92 of 102 . When two hospitalizations occur.

Thirty items are arranged in a 6-by-5 array as shown.141. A1 A6 A11 A16 A21 A26 A2 A7 A12 A17 A22 A27 A3 A8 A13 A18 A23 A28 A4 A9 A14 A19 A24 A29 A5 A10 A15 A20 A25 A30 Calculate the number of ways to form a set of three distinct items such that no two of the selected items are in the same row or same column. (A) (B) (C) (D) (E) 200 760 1200 4560 7200 93 of 102 .

he or she will receive a 5.142.000 94 of 102 . if a policyholder does not have an accident.000 54.80 and the probability of zero accidents for low-risk drivers is 0.000 60. (A) (B) (C) (D) (E) 48. In each month.000 policyholders of the auto insurance company. Calculate the expected bonus payment from the insurer to the 1000 policyholders in one year. the probability of zero accidents for high-risk drivers is 0.000 50.00 cash-back bonus from the insurer.90. Among the 1. An auto insurance company is implementing a new bonus system. 400 are classified as lowrisk drivers and 600 are classified as high-risk drivers. In each month.400 51.

01. (A) (B) (C) (D) (E) 0.890 95 of 102 .10. The probability that a member of this class will file a liability claim but not a property claim is 0.864 0. Calculate the probability that a randomly selected member of this class of homeowners will not file a claim of either type. and the probability that a member of this class will file a property claim is 0.860 0. The probability that a member of a certain class of homeowners with liability and property coverage will file a liability claim is 0.04.850 0.870 0.143.

A client spends X minutes in an insurance agent’s waiting room and Y minutes meeting with the agent. Which of the following expressions represents the probability that a client spends less than 60 minutes at the agent’s office? (A) 1 800 ∫ 0 1 800 ∫ 0 1 800 40 20 ∫e 0 − x 40 e − y 20 dydx 40 20 − x (B) ∫ 0 e − x 40 e − y 20 dydx 20 40 − x (C) ∫ ∫ 0 0 e − x 40 e − y 20 dydx (D) 1 800 ∫ 0 1 800 ∫ 0 60 60 ∫e 0 − x 40 e − y 20 dydx 60 60 − x (E) ∫ 0 e − x 40 e − y 20 dydx 96 of 102 . ⎩ for x > 0. ⎪ ⎪ 800 f ( x.144. y > 0 otherwise. The joint density function of X and Y can be modeled by ⎧ 1 −x −y e 40 e 20 . y ) = ⎨ ⎪ ⎪0.

⎪1. ⎪ 0. New dental and medical plan options will be offered to state employees next year.5 < y < 1 and 0 < y < 0.75.076 0. An actuary uses the following density function to model the joint distribution of the proportion X of state employees who will choose Dental Option 1 and the proportion Y who will choose Medical Option 1 under the new plan options: ⎧0.50.145.25. y ) = ⎨ ⎪1. ⎪ f ( x.083 0.50.5 and 0.061 0.5 0.5 0 < x < 0.141 97 of 102 .5 < x < 1 and 0 < y < 0. ⎩ for for for for 0 < x < 0. (A) (B) (C) (D) (E) 0.5 < x < 1 0.5 and 0.75).000 0.5 < y < 1 Calculate Var (Y | X = 0.

A survey of 100 TV watchers revealed that over the last year: i) ii) iii) iv) v) vi) vii) viii) 34 watched CBS. 15 watched NBC. 6 watched CBS and ABC. or ABC. 4 watched CBS. 10 watched ABC.146. 5 watched NBC and ABC. NBC. (A) (B) (C) (D) (E) 1 37 45 55 82 98 of 102 . 18 watched HGTV and of these. ABC or HGTV). and ABC. none watched CBS. 7 watched CBS and NBC. NBC. NBC. Calculate how many of the 100 TV watchers did not watch any of the four channels (CBS.

000.000.004. By imposing a deductible of d. The number of hurricanes that will hit a certain house in the next ten years is Poisson distributed with mean 4.000 99 of 102 . Calculate the percentage reduction on the variance of the claim payment.000 20. Calculate the variance of the total loss due to hurricanes hitting this house in the next ten years. the insurance company reduces the expected claim payment by 10%.000. Each hurricane results in a loss that is exponentially distributed with mean 1000. The amount of a claim that a car insurance company pays out follows an exponential distribution.000 4.000 16. Losses are mutually independent and independent of the number of hurricanes.000. (A) (B) (C) (D) (E) 4. (A) (B) (C) (D) (E) 1% 5% 10% 20% 25% 148.000 8.147.

4116 100 of 102 . (A) (B) (C) (D) (E) 0.0432 0.0756 0. Losses are mutually independent and independent of the number of accidents. The motorist’s insurer reimburses 70% of each loss due to an accident. each independently resulting in an accident with probability 0.25. Calculate the variance of the total unreimbursed loss the motorist experiences due to accidents resulting from these driving errors.2520 0. Each accident results in a loss that is exponentially distributed with mean 0.149. A motorist makes three driving errors.80.1782 0.

27 0. (A) (B) (C) (D) (E) 0. The probability is 0. an airline luggage handler damages a random sample of four. (A) (B) (C) (D) (E) 3466 3659 4159 8487 8987 151.150. Calculate the 95th percentile of the insurance company payout on this policy. the loss before application of the deductible is exponentially distributed with mean 3000.13 0.30 0. An automobile insurance company issues a one-year policy with a deductible of 500. Calculate the probability that exactly two of the four damaged pieces are insured.8 that the insured automobile has no accident and 0. From 27 pieces of luggage. If there is an accident.0 that the automobile has more than one accident. The probability that exactly one of the damaged pieces of luggage is insured is twice the probability that none of the damaged pieces are insured.06 0.31 101 of 102 .

3214 0. Actuary Toby follows the same procedure with high-risk policies. (A) (B) (C) (D) (E) 0. Each high-risk policy has a 20% probability of having a claim.4000 102 of 102 .3571 0.2857 0. Each low-risk policy has a 10% probability of having a claim. Calculate the probability that Actuary Rahul examines fewer policies than Actuary Toby. Automobile policies are separated into two groups: low-risk and high-risk.152. Actuary Rahul examines low-risk policies. The claim statuses of polices are mutually independent.3333 0. continuing until a policy with a claim is found and then stopping.

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