Student Solutions Manual to Accompany Loss Models: From Data to Decisions, Fourth Edition

CHAPTER 2

CHAPTER 2 SOLUTIONS

2.1   SECTION 2.2

2.1   

2.2 The requested plots follow. The triangular spike at zero in the density function for Model 4 indicates the 0.7 of discrete probability at zero.

2.3 f′(x) = 4(1 + x²)⁻³ − 24x²(1 + x²)⁻⁴. Setting the derivative equal to zero and multiplying by (1 + x²)⁴ give the equation 4(1 + x²) − 24x² = 0. This is equivalent to x² = 1/5. The only positive solution is the mode of .

2.4 The survival function can be recovered as

Taking logarithms ...