A insurance policy reimburses a loss X up to a maximum benefit of 1250. X has...

A insurance policy reimburses a loss X up to a maximum benefit of 1250. X has an exponential distribution with mean 1500. Calculate the median benefit for this policy. Answer to the nearest whole number.

Expert Solution

Let median benefit is k. Then:

P(X < k) = 0.50

1 - e^-k/1500 = 0.50

k = 1039.72

k = 1040 [Rounded to nearest whole number]

orchestra answered 2 years ago

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A insurance policy reimburses a loss X up to a maximum benefit of 1250. X has...

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