The number of successful claims on life insurance policies for an insurance company has been determined...

The number of successful claims on life insurance policies for an insurance company has been determined to follow a Poisson process with an average rate of 5 claims per week. If the amount of money paid on each policy is uniformly distributed between $2,000 and $10,000, what is the mean of the total amount of money that the company pays out in a four-week period?

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Expert Solution

expected amount paid on single policy E(x)=(2000+10000)/2 =6000

expected number of polcies to be paid in 4 week E(N)=4*5 =20

therefore mean of the total amount of money that the company pays out in a four-week period =E(X)*E(N)

=20*6000=120000

orchestra answered 1 year ago

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