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use the frequency and severity distributions given to answer the
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use the frequency and severity distributions given to answer the following questions.

Frequency Distribution          Severity Distribution

Losses        Probability             Loss Amount        Probability

0                        55%                           \$400                     30%

1                         30%                            \$700                      50%

2                         15%                             \$1200                     20%

Mean=?                                                              Mean=\$710

a. Calculate the mean of the frequency distribution.

b. Determine the total loss distribution.  Show all of the possible losses and their associated probabilities.  Prove that the probabilities add to one.

c. Calculate the mean of the total loss distribution and show that it is equal to the mean of the severity distribution times the mean of the frequency distribution.

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This question was answered on: Feb 21, 2020

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