Let us consider a portfolio of homeowners and automobile insurance policies. There are 1000 homeowner's policies sold, and 2000 auto policies sold by an insurer. The data on each risk and correlations is as follows: Auto policies: Mean loss = $500, Standard deviation of losses = $700, correlation among auto risks = 0.1 Homeowners' (HO) policies: Mean loss = $300, Standard deviation of losses $400, correlation among auto risks = 0.2 = The cross correlations between the Auto and HO policy = 0.005. What is the mean loss on the entire pool of auto and HO combined (portfolio) together? What is the standard deviation of the mean loss per policy?
Let us consider a portfolio of homeowners and automobile insurance policies. There are 1000 homeowner's policies sold, and 2000 auto policies sold by an insurer. The data on each risk and correlations is as follows: Auto policies: Mean loss = $500, Standard deviation of losses = $700, correlation among auto risks = 0.1 Homeowners' (HO) policies: Mean loss = $300, Standard deviation of losses $400, correlation among auto risks = 0.2 = The cross correlations between the Auto and HO policy = 0.005. What is the mean loss on the entire pool of auto and HO combined (portfolio) together? What is the standard deviation of the mean loss per policy?
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 11PPS
Related questions
Question
J2.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 3 images
Recommended textbooks for you
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
Big Ideas Math A Bridge To Success Algebra 1: Stu…
Algebra
ISBN:
9781680331141
Author:
HOUGHTON MIFFLIN HARCOURT
Publisher:
Houghton Mifflin Harcourt
Holt Mcdougal Larson Pre-algebra: Student Edition…
Algebra
ISBN:
9780547587776
Author:
HOLT MCDOUGAL
Publisher:
HOLT MCDOUGAL
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
Big Ideas Math A Bridge To Success Algebra 1: Stu…
Algebra
ISBN:
9781680331141
Author:
HOUGHTON MIFFLIN HARCOURT
Publisher:
Houghton Mifflin Harcourt
Holt Mcdougal Larson Pre-algebra: Student Edition…
Algebra
ISBN:
9780547587776
Author:
HOLT MCDOUGAL
Publisher:
HOLT MCDOUGAL