In: Statistics and Probability
a) For policyholder in group 3, the probability that the person will have at least one accident in a year is computed here as:
Therefore 0.9502 is the required probability here.
b) We are given here that:
P( group 1) = 0.2, P(group 2) = P(group 3) = 0.4
The probability that the person will have at least one accident in a year for different groups is computed here as:
Using law of total probability, we get here:
P(X = 2) = P(X = 2| group-1)P(group 1) + P(X = 2| group-2)P(group
2) + P(X = 2| group-3)P(group 3)
P(X = 2) = 0.1839*0.2 + 0.2707*0.4 + 0.2240*0.4 = 0.2347
Therefore 0.2347 is the required probability here.