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Homework answers / question archive / 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) Find P [N2= 0 |N1= 0]
(ii) Evaluate E [N2|N1= 0]
