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A group insurance includes TWO policies
A group insurance includes TWO policies. Annual claim frequency, N, is assumed to have a common binomial distribution, so if the claim rate, q were known, then
(N|Q = q) ∼ Bin [2, q]
and the prior distribution of Q is
P [Q = 0.2] = P [Q = 0.6] = 0.5.
(i) Determine E [N]
(ii) Evaluate P [N = 0]
(iii) Derive P [N = 2]
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