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# CHAPTER 12 SOLUTIONS

### 12.1   SECTION 12.1

12.1 The calculations are in Tables 12.1 and 12.2.

Table 12.1  Calculations for Exercise 12.1.

Table 12.2  Further calculations for Exercise 12.1.

12.2

12.3

12.4 Using the raw data, the results are in Table 12.3. When the deductible and limit are imposed, the results are as in Table 12.4. Because 1,000 is a censoring point and not an observed loss value, there is no change in the survival function at 1,000.

Table 12.3  Calculations for Exercise 12.4.

Table 12.4  Further calculations for Exercise 12.4.

12.5 Suppose the lapse was at time 1. The estimate of S(4) is (3/4)(2/3)(1/2) = 0.25. If it is at time 2, the estimate is (4/5)(2/3)(1/2) = 0.27. If it is at time 3, the estimate is (4/5)(3/4)(1/2) = 0.3. If it is at time 4, the estimate is (4/5)(3/4)(2/3) = 0.4. If it is at time 5, the estimate is (4/5)(3/4)(2/3)(1/2) = 0.20. ...

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