GBS 221 Exam 2 Review 1. Safety Insurance Company has compiled the following sta

Question

GBS 221 Exam 2 Review 1. Safety Insurance Company has compiled the following statistices.Twenty percent of policyholders are males under 25 years of age. Forty percent of policyholders are males 25 and over. Ten percent of policyholders are females under 25 years of age. Thirty percent of policyholders are females 25 and over. For any one year period, twenty two percent of males under 25 years of age report an accident. Fifteen percent of males 25 and older report an accident. Sixteen percent of females under 25 report accidents. Fourteen percent of females 25 and older report accidents. Given that an accident is reported what is the probability that it came from: a. males under 25 b. males 25 and over c. females under 25 d. females 25 and over

Explanation / Answer

1)

THE DISTRIBUTION WILL BECOME

X                      PERCENTAGE HOLD             PERCENTAGE CLAIM

MALE <25           20%                                                  20%

MALE>25               40%                                             15%

FEMALE<25             10%                                            16%

FEMALE >25             30%                                               14%   

A) PROBABILITY OF MALE < 25 = 0.20*0.20 = 0.04

B) PROBABILITY OF MALE > 25 = 0.40*0.15 = 0.06

C) PROBABILITY OF FEMALE < 25 = 0.10*0.16 = 0.06

D) PROBABILITY OF FEMALE> 25 = 0.30*0.14 = 0.042

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