SOCIETY OF ACTUARIES

EXAM P PROBABILITY

EXAM P SAMPLE SOLUTIONS

This set of sample questions includes those published on the probability topic for use with
previous versions of this examination. Questions from previous versions of this document that
are not relevant for the syllabus effective with the September 2022 administration have been
deleted. The questions have been renumbered. Unless indicated below, no questions have been
added to the version published for use with exams through July 2022.

Some of the questions in this study note are taken from past SOA examinations.

These questions are representative of the types of questions that might be asked of candidates
sitting for the Probability (P) Exam. These questions are intended to represent the depth of
understanding required of candidates. The distribution of questions by topic is not intended to
represent the distribution of questions on future exams.
For questions involving the normal distribution, answer choices have been calculated using exact
values for the normal distribution. Using the normal table provided and rounding to the closest
value may give you answers slightly different from the answer choices. As always, choose the
best answer provided from the five choices when selecting your answer.

Questions 271-287 were added July 2022.

Questions 288-319 were added August 2022.
Questions 234-236 and 282 were deleted October 2022
Questions 320-446 were added November 2023
Several questions that were duplicates of earlier questions were removed February 2024
Questions 447-485 were added March 2024
Questions 486-570 were added September 2024
Questions 571-627 were added December 2024

Copyright 2024 by the Society of Actuaries.

Page 1 of 175
1. Solution: D

Let G = viewer watched gymnastics, B = viewer watched baseball, S = viewer watched soccer.
Then we want to find
Pr ( G ∪ B ∪ S )  =1 − Pr ( G ∪ B ∪ S )
c
 
1  Pr ( G ) + Pr ( B ) + Pr ( S ) − Pr ( G ∩ B ) − Pr ( G ∩ S ) − Pr ( B ∩ S ) + Pr ( G ∩ B ∩ S ) 
=−
1 − ( 0.28 + 0.29 + 0.19 − 0.14 − 0.10 − 0.12 + 0.08 ) =
= 1 − 0.48 =
0.52

2. Solution: A

Let R = referral to a specialist and L = lab work. Then

P[ R ∩ L]= P[ R] + P[ L] − P[ R ∪ L]= P[ R] + P[ L] − 1 + P[( R ∪ L)c ]
′] 0.30 + 0.40 − 1 + 0.35
= p[ R] + P[ L] − 1 + P[ R c ∩ L= = 0.05.

3. Solution: D

First note
P [ A ∪ B=] P [ A] + P [ B ] − P [ A ∩ B ]
P  A ∪ B c  = P [ A] + P  B c  − P  A ∩ B c 
Then add these two equations to get
P [ A ∪ B ] + P  A ∪ B=
c
( ) (
 2 P [ A] + P [ B ] + P  B c  − P [ A ∩ B ] + P  A ∩ B c  )
0.9 2 P [ A] + 1 − P ( A ∩ B ) ∪ ( A ∩ B c ) 
0.7 +=
1.6 2 P [ A] + 1 − P [ A]
=
P [ A] = 0.6

Page 2 of 175
 4. Solution: A

For i = 1,2, let Ri = event that a red ball is drawn from urn i and let Bi = event that a blue ball is
drawn from urn i. Then, if x is the number of blue balls in urn 2,
0.44= Pr[( R1 ∩ R2 )  ( B1 ∩ B2 )]= Pr[ R1 ∩ R2 ] + Pr [ B1 ∩ B2 ]
= Pr [ R1 ] Pr [ R2 ] + Pr [ B1 ] Pr [ B2 ]
4  16  6  x 
=  +  
10  x + 16  10  x + 16 

Therefore,

32 3x 3x + 32
2.2 = + =
x + 16 x + 16 x + 16
2.2 x + 35.2 =3 x + 32
0.8 x = 3.2
x=4

5. Solution: D

Let N(C) denote the number of policyholders in classification C. Then

N(Young and Female and Single)
= N(Young and Female) – N(Young and Female and Married)
= N(Young) – N(Young and Male) – [N(Young and Married) – N(Young and Married and
Male)]
= 3000 – 1320 – (1400 – 600) = 880.

6. Solution: B

Let
H = event that a death is due to heart disease
F = event that at least one parent suffered from heart disease
Then based on the medical records,
210 − 102 108
P  H ∩ = F c  =
937 937
937 − 312 625
P  F c  =
=
937 937
P  H ∩ F c  108 625 108
and P  H | F= c
 = = = 0.173
P  F c  937 937 625

Page 3 of 175
 7. Solution: D

Let A = event that a policyholder has an auto policy and H = event that a policyholder has a
homeowners policy. Then,
Pr ( A ∩ H ) =0.15
Pr ( A ∩ H c ) = Pr ( A ) − Pr ( A ∩ H ) = 0.65 − 0.15 = 0.50
Pr ( Ac ∩ H ) = Pr ( H ) − Pr ( A ∩ H ) = 0.50 − 0.15 = 0.35
and the portion of policyholders that will renew at least one policy is given by
0.4 Pr ( A ∩ H c ) + 0.6 Pr ( Ac ∩ H ) + 0.8 Pr ( A ∩ H )
( 0.4 )( 0.5) + ( 0.6 )( 0.35) + ( 0.8)( 0.15) =
= 0.53 (=
53% )

8. Solution: D

Let C = event that patient visits a chiropractor and T = event that patient visits a physical
therapist. We are given that
[C ] Pr [T ] + 0.14
Pr=
Pr ( C ∩ T ) =
0.22
Pr ( C c ∩ T c ) =
0.12
Therefore,
1 Pr C c ∩ T c  =Pr [C ∪ T ] =Pr [C ] + Pr [T ] − Pr [C ∩ T ]
0.88 =−
= Pr [T ] + 0.14 + Pr [T ] − 0.22
= 2 Pr [T ] − 0.08
or
P [T ] =
( 0.88 + 0.08) 2 =
0.48

9. Solution: B

Let M = event that customer insures more than one car and S = event that customer insurers a
sports car. Then applying DeMorgan’s Law, compute the desired probability as:
(
Pr M c ∩ S c = )
Pr ( M ∪ S )  =

c

1 − Pr ( M ∪ S ) =
1 −  Pr ( M ) + Pr ( S ) − Pr ( M ∩ S ) 

1 − Pr ( M ) − Pr ( S ) + Pr ( S M ) Pr ( M ) =
= 1 − 0.70 − 0.20 + ( 0.15 )( 0.70 ) =
0.205

Page 4 of 175
 10. Solution: B

Let C = Event that a policyholder buys collision coverage and D = Event that a policyholder
buys disability coverage. Then we are given= that P[C ] 2 P[ D] and=
P[C ∩ D] 0.15 .
By the independence of C and D,
0.15 = [C ∩ D] = P[C ]P[ D] = 2 P[ D]2
= =
P[ D]2 0.15 / 2 0.075
= P[ D] =0.075, P[C ] 2 0.075.
Independence of C and D implies independence of Cc and Dc. Then
P[C c ∩ D c ] =P[C c ]P[ D c ] =(1 − 2 0.075)(1 − 0.075) =0.33.

11. Solution: E

“Boxed” numbers in the table below were computed.

High BP Low BP Norm BP Total
Regular heartbeat 0.09 0.20 0.56 0.85
Irregular heartbeat 0.05 0.02 0.08 0.15
Total 0.14 0.22 0.64 1.00
From the table, 20% of patients have a regular heartbeat and low blood pressure.

12. Solution: C

Let x be the probability of having all three risk factors.

1 P[ A ∩ B ∩ C] x
= P [ A ∩ B ∩ C | A ∩ B= ] =
3 P [ A ∩ B] x + 0.12
It follows that
1 1
x =( x + 0.12 ) = x + 0.04
3 3
2
x = 0.04
3
x = 0.06
Now we want to find
P ( A ∪ B ∪ C ) 
c

P ( A ∪ B ∪ C ) | Ac  =  
c
  P  A 
c

1− P[ A ∪ B ∪ C]
=
1 − P [ A]
1 − 3 ( 0.10 ) − 3 ( 0.12 ) − 0.06
=
1 − 0.10 − 2 ( 0.12 ) − 0.06
0.28
= = 0.467
0.60

Page 5 of 175
13. Solution: A

k
1 11 111 1
p=
k pk −=
1 pk −=
2 pk −=
3 =   p0
 k ≥0
5 55 555 5
∞ ∞ k
1 p0 5
1=
=1 ∑=
pk ∑  =
k 05
p0 =
1 4
p0=, p0 4 / 5
= k 0=
1−
5
Therefore, P[N > 1] = 1 – P[N £1] = 1 – (4/5 + 4/5 x 1/5) = 1 – 24/25 = 1/25 = 0.04 .

14. Solution: C

Let x be the probability of choosing A and B, but not C, y the probability of choosing A and C,
but not B, z the probability of choosing B and C, but not A.

We want to find w = 1 – (x + y + z).

We have x + y = 1/4, x + z = 1/3, y + z = 5/12.
Adding these three equations gives
1 1 5
( x + y) + ( x + z) + ( y + z) = + +
4 3 12
2( x + y + z) = 1
1
x+ y+z =
2
1 1
w =1 − ( x + y + z ) =1 − = .
2 2
Alternatively the three equations can be solved to give x = 1/12, y = 1/6, z =1/4 again leading to
 1 1 1 1
w =1 −  + +  =
 12 6 4  2

15. Solution: D

Let N1 and N2 denote the number of claims during weeks one and two, respectively. Then since
they are independent,
P [ N1 + N 2 =7 ] =∑ n =0 P [ N1 =n ] Pr [ N 2 =7 − n ]
7

7  1  1 
= ∑ n =0  n +1   8− n 
 2  2 
1
= ∑ n =0 9
7

2
8 1 1
= = 9
=6
2 2 64

Page 6 of 175
 16. Solution: D

Let O = event of operating room charges and E = event of emergency room charges. Then
0.85= P ( O ∪ E )= P ( O ) + P ( E ) − P ( O ∩ E )
= P (O ) + P ( E ) − P (O ) P ( E ) ( Independence )
Because P E =
c
( )1 − P ( E ) , P( E ) =
0.25 = 0.75 ,
0.85 = P ( O ) + 0.75 − P ( O )( 0.75 )
P(O)(1 − 0.75) = 0.85 − 0.75 = 0.10
= =
P(O) 0.10 / 0.25 0.40.

17. Solution: D

Let X1 and X2 denote the measurement errors of the less and more accurate instruments,
respectively. If N ( µ , σ ) denotes a normal random variable then
X 1  N (0, 0.0056h), X 2  N (0, 0044h) and they are independent. It follows that
X1 + X 2 0.00562 h 2 + 0.00442 h 2
Y =  N (0, 0.00356h) . Therefore,
2 4
 0.005h − 0 0.005h − 0 
P(−0.005h ≤ Y ≤ 0.005h) = P  − ≤Z≤ 
 0.00356h 0.00356h 
= P(−1.4 ≤ Z ≤ 1.4) = P( Z ≤ 1.4) − [1 − P( Z ≤ 1.4)] = 2(0.9192) − 1 = 0.84.

18. Solution: B

Apply Bayes’ Formula. Let

A = Event of an accident
B1 = Event the driver’s age is in the range 16-20
B2 = Event the driver’s age is in the range 21-30
B3 = Event the driver’s age is in the range 30-65
B4 = Event the driver’s age is in the range 66-99
Then
P ( A B1 ) P ( B1 )
P ( B1 A ) =
P ( A B1 ) P ( B1 ) + P ( A B2 ) P ( B2 ) + P ( A B3 ) P ( B3 ) + P ( A B4 ) P ( B4 )

= 0.1584
( 0.06 )( 0.08)
( 0.06 )( 0.08) + ( 0.03)( 0.15) + ( 0.02 )( 0.49 ) + ( 0.04 )( 0.28)

Page 7 of 175
19. Solution: D

Let
S = Event of a standard policy
F = Event of a preferred policy
U = Event of an ultra-preferred policy
D = Event that a policyholder dies
Then
P [ D | U ] P [U ]
P [U | D ] =
P [ D | S ] P [ S ] + P [ D | F ] P [ F ] + P [ D | U ] P [U ]

=
( 0.001)( 0.10 )
( 0.01)( 0.50 ) + ( 0.005)( 0.40 ) + ( 0.001)( 0.10 )
= 0.0141

20. Solution: B

P Seri. Surv.
P Surv. Seri. P [Seri.]
=
P Surv. Crit. P [ Crit.] + P Surv. Seri. P [Seri.] + P Surv. Stab. P [Stab.]

= 0.29
( 0.9 )( 0.3)
( 0.6 )( 0.1) + ( 0.9 )( 0.3) + ( 0.99 )( 0.6 )
21. Solution: D

Let H = heavy smoker, L = light smoker, N = non-smoker, D = death within five-year period.
1
We = are given that P[ D | L] 2= P[ D | N ] and P[ D | L] P[ D | H ]
2
Therefore,
P  D H  P [ H ]
P  H D  =
P  D N  P [ N ] + P  D L  P [ L ] + P  D H  P [ H ]
2 P  D L  ( 0.2 ) 0.4
= = = 0.42
P  D L  ( 0.5 ) + P  D L  ( 0.3) + 2 P  D L  ( 0.2 ) 0.25 + 0.3 + 0.4
1
2

Page 8 of 175
22. Solution: D

Let
C = Event of a collision
T = Event of a teen driver
Y = Event of a young adult driver
M = Event of a midlife driver
S = Event of a senior driver
Then,
P[C Y ]P[Y ]
P[Y | C ] =
P[C T ]P[T ] + P[C Y ]P[Y ] + P[C M ]P[ M ] + P[C S ]P[ S ]
(0.08)(0.16)
= 0.22.
(0.15)(0.08) + (0.08)(0.16) + (0.04)(0.45) + (0.05)(0.31)

23. Solution: B

P [1 ≤ N ≤ 4] 1 1 1 1  1 1 1 1 1
P  N ≥ 1 N ≤ 4  = = + + +   + + + + 
P [ N ≤ 4]  6 12 20 30   2 6 12 20 30 
10 + 5 + 3 + 2 20 2
= = =
30 + 10 + 5 + 3 + 2 50 5

24. Solution: B

Let Y = positive test result

D = disease is present
Then,
P[Y | D]P[ D] (0.95)(0.01)
P[ D | Y ] = = 0.657.
P[Y | D]P[ D] + P[Y | D ]P[ D ] (0.95)(0.01) + (0.005)(0.99)
c c

25. Solution: C

Let:
S = Event of a smoker
C = Event of a circulation problem
Then we are given that P[C] = 0.25 and P[S½C] = 2 P[S½Cc]
Then,,
P[ S | C ]P[C ]
P[C | S ] =
P[ S | C ]P[C ] + P[ S | C c ]P[C c ]
2 P[ S | C c ]P[C ] 2(0.25) 2 2
= = = =
2 P[ S | C ]P[C ] + P[ S | C ](1 − P[C ]) 2(0.25) + 0.75 2 + 3 5
c c

Page 9 of 175
 26. Solution: D

Let B, C, and D be the events of an accident occurring in 2014, 2013, and 2012, respectively.
Let A = B ∪ C ∪ D .
P[ A B]P[ B]
P[ B | A] =
P[ A B][ P[ B] + P[ A C ]P[C ] + P[ A D]P[ D]
Use Bayes’ Theorem
(0.05)(0.16)
= = 0.45.
(0.05)(0.16) + (0.02)(0.18) + (0.03)(0.20)

27. Solution: A

Let
C = Event that shipment came from Company X
I = Event that one of the vaccine vials tested is ineffective
P [ I | C ] P [C ]
Then, P [C | I ] = .
P [ I | C ] P [C ] + P  I | C c  P C c 
Now
1
P [C ] =
5
1 4
P C c  =1 − P [C ] =1 − =
5 5
=P[I | C] (=) ( 0.10 )( 0.90 ) 0.141
30
1
29

P  I | C  (=
= ) ( 0.02 )( 0.98) 0.334
c 30 29
1

Therefore,

P [C | I ]
( 0.141)(1/ 5)
= 0.096 .
( 0.141)(1/ 5) + ( 0.334 )( 4 / 5)
28. Solution: C

Let T denote the number of days that elapse before a high-risk driver is involved in an accident.
Then T is exponentially distributed with unknown parameter l . We are given that
50

∫ λe dt =
− λt
0.3 =
P[T ≤ 50] = −e − λ t 50
1 − e −50 λ .
=
0
0
=50 λ
Therefore, e = 0.7 and λ = −(1/ 50) ln(0.7).
Then,
80

∫ λe dt =
− λt
P[T ≤ 80] = −e − λ t 80
1 − e −80 λ
=
0
0 = 1 – e–80l
=
1 − e(80/50)ln(0.7) =
1 − 0.78/5 =
0.435.

Page 10 of 175
 29. Solution: D

e−λ λ 2 e−λ λ 4
Let N be the number of claims filed. We are given P[ N= 2]= = 3P[ N= 4]
= 3 .
2! 4!
Then,
1 2 3 4
= λ λ =or λ 2 4=or λ 2 , which is the variance of N.
2 24

30. Solution: D

Let X denote the number of employees who achieve the high performance level. Then X follows
a binomial distribution with parameters n = 20 and p = 0.02. Now we want to determine x such
that P[X > x] < 0.01 or equivalently 0.99 ≤ P [ X ≤ x ] =
x k
( )
∑ k =0 20k ( 0.02 ) ( 0.98)
20 − k

The first three probabilities (at 0, 1, and 2) are 0.668, 0.272, and 0.053. The total is 0.993 and so
the smallest x that has the probability exceed 0.99 is 2. Thus C = 120/2 = 60.

31. Solution: D

Let
X = number of low-risk drivers insured
Y = number of moderate-risk drivers insured
Z = number of high-risk drivers insured
f(x, y, z) = probability function of X, Y, and Z
Then f is a trinomial probability function, so
P [ z ≥ x + 2] = f ( 0, 0, 4 ) + f (1, 0,3) + f ( 0,1,3) + f ( 0, 2, 2 )
4!
( 0.20 ) + 4 ( 0.50 )( 0.20 ) + 4 ( 0.30 )( 0.20 ) +
= ( 0.30 ) ( 0.20 )
4 3 3 2 2

2!2!
= 0.0488

32. Solution: B

 1 
P [ X=
> x] 0.005 ( 20 =
− t ) dt 0.005  20t − t 2  20
20
∫ x
 2 
x

 1 2  1 
= 0.005  400 − 200 − 20 x + = x  0.005  200 − 20 x + x 2 
 2   2 
where 0 < x < 20. Therefore,
P [ X > 16] 200 − 20 (16 ) + 1 2 (16 )
2
8 1
P  X > 16 X > 8=
 = = = .
P [ X > 8] 200 − 20 ( 8 ) + 1 ( 8 )
2
72 9
2

Page 11 of 175
 33. Solution: C

We know the density has the form C (10 + x )

−2
for 0 < x < 40 (equals zero otherwise). First,
determine the proportionality constant C.
40
C C 2
( )
40 −2
∫0
−1
1= C 10 + x dx =− C (10 + x ) =− = C
0 10 50 25
So C = 25/2 or 12.5. Then, calculate the probability over the interval (0, 6):
−1 6  1 1
12.5∫ (10 + x ) dx = −12.5 (10 + x )
6 −2
=12.5  −  = 0.47 .
0 0  10 16 

34. Solution: B

To determine k,
1
k k
1 = 1=∫0 k (1 − y ) dy =
− (1 − y ) 1 =
4 5
, so k = 5
5 0 5
We next need to find P[V > 10,000] = P[100,000 Y > 10,000] = P[Y > 0.1], which is
1

∫ 5 (1 − y ) dy =− (1 − y ) =0.95 =
4 5 1
0.59 and P[V > 40,000] which is
0.1
0.1
1

∫ 5 (1 − y ) dy =− (1 − y ) =0.65 =
4 5 1
0.078 . Then,
0.4
0.4

P[V > 40, 000 ∩ V > 10, 000] P[V > 40, 000] 0.078
P[V > 40, 000 | V > 10, 000] = = = =0.132.
P[V > 10, 000] P[V > 10, 000] 0.590

35. Solution: D

Let Τ denote printer lifetime. The distribution function is F (t ) = 1 − e − t /2 . The probability of

failure in the first year is F(1) = 0.3935 and the probability of failure in the second year is F(2) –
F(1) = 0.6321 – 0.3935 = 0.2386. Of 100 printers, the expected number of failures is 39.35 and
23.86 for the two periods. The total expected cost is 200(39.35) + 100(23.86) = 10,256.

36. Solution: A

x
∫ 3t dt =
−4 x
The distribution function is F ( x) =P[ X ≤ x] = −t −3 =
1 − x −3 . Then,
1 1

P [ ( X < 2) and ( X ≥ 1.5) ] P[ X < 2] − Pr[X < 1.5]

=
P[ X < 2 | X ≥ 1.5] =
P [ X ≥ 1.5] Pr [ X ≥ 1.5]
F (2) − F (1.5) (1 − 2−3 ) − (1 − 1.5−3 ) −1/ 8 + 8 / 27 37
= = −3
= = = 0.578
1 − F (1.5) 1 − (1 − 1.5 ) 8 / 27 64

Page 12 of 175
37. Solution: E

The number of hurricanes has a binomial distribution with n = 20 and p = 0.05. Then
P[ X < =
3] 0.9520 + 20(0.95)19 (0.05) + 190(0.95)18 (0.05)=
2
0.9245.

38. Solution: B

Denote the insurance payment by the random variable Y. Then

0 if 0< X ≤C
Y =
X − C if C < X <1
We are given that
0.5 + C 0.5 + C
0.64 = P[Y < 0.5] = P[0 < X < 0.5 + C ] = ∫ 0
2 x dx = x 2
0
= (0.5 + C ) 2 .

The quadratic equation has roots at C = 0.3 and –1.3. Because C must be between 0 and 1, the
solution is C = 0.3.

39. Solution: E

The number completing the study in a single group is binomial (10,0.8). For a single group the
9 ) ( 0.8 ) ( 0.2 ) + ( 10 ) ( 0.8 ) =
probability that at least nine complete the study is ( 10
9 10 10
0.376
The probability that this happens for one group but not the other is 0.376(0.624) + 0.624(0.376)
= 0.469.

40. Solution: D

There are two situations where Company B’s total exceeds Company A’s. First, Company B has
at least one claim and Company A has no claims. This probability is 0.3(0.6) = 0.18. Second,
both have claims. This probability is 0.3(0.4) = 0.12. Given that both have claims, the
distribution of B’s claims minus A’s claims is normal with mean 9,000 – 10,000 = –1,000 and
standard deviation 2, 0002 + 2, 0002 =
2,828.43. The probability that the difference exceeds
0 − (−1, 000)
zero is the probability that a standard normal variable exceeds = 0.354. The
2,828.43
probability is 1 – 0.638 = 0.362. The probability of the desired event is 0.18 + 0.12(0.362) =
0.223.

Page 13 of 175
 41. Solution: D

One way to view this event is that in the first seven months there must be at least four with no
accidents. These are binomial probabilities:
() 3 7
() 5 2 7 6
()
4 0.4 0.6 + 5 0.4 0.6 + 6 0.4 0.6 + 7 0.4
7 4 7 7
()
= 0.1935 + 0.0774 + 0.0172 + 0.0016 = 0.2897.

Alternatively, consider a negative binomial distribution where K is the number of failures before
the fourth success (no accidents). Then
P[ K < 4]= 0.44 + ( 14 ) 0.44 0.6 + ( 52 ) 0.44 0.62 + ( 36 ) 0.44 0.63 = 0.2898

42. Solution: C

The probabilities of 1, 2, 3, 4, and 5 days of hospitalization are 5/15, 4/15, 3/15, 2/15, and 1/15
respectively. The payments are 100, 200, 300, 350, and 400 respectively. The expected value is
[100(5) + 200(4) + 300(3) + 350(2) + 400(1)]/15 = 220.

43. Solution: D
0 4
−x x x3 x3 8 64 56 28
E(X ) =
0 4
∫ −2 10 ∫0 10
x dx + x dx =
− +
30 −2 30 0
=
− + ==
30 30 30 15

44. Solution: D

The density function of T is

1 − t /3
= f (t ) e , 0 <t <∞
3
Therefore,
2 − t /3 ∞ t
E [ X ] E  max (T , 2 )
2
= = ∫0 3
e dt + ∫ e − t /3 dt
2 3

∞
=−2e − t /3 | 20 −te − t /3 | ∞2 + ∫ e − t /3 dt =−2e −2/3 + 2 + 2e −2/3 − 3e − t /3 | ∞2
2

= 2 + 3e −2/3
Alternatively, with probability 1 − e −2/3 the device fails in the first two years and contributes 2 to
the expected value. With the remaining probability the expected value is 2 + 3 = 5 (employing
the memoryless property). The unconditional expected value is (1 − e −2/3 )2 + (e −2/3 )5 = 2 + 3e −2/3 .

Page 14 of 175
 45. Solution: D

We want to find x such that

1 3
x –t/10 x 1 –t/10
1000 = E[P] = ∫
0
10
e dt + ∫1 2 10 e dt =
1 3
=1000 ∫0
x(0.1) e − t /10 dt + ∫ 0.5 x(0.1)e − t /10 dt
1

− t /10 1 3
=
− xe −0.5 xe − t /10
0 1
−1/10 −3/10
=− xe + x − 0.5 xe + 0.5 xe −1/10 =0.1772 x.
Thus x = 5644.

46. Solution: E

E[Y ] = 4000(0.4) + 3000(0.6)(0.4) + 2000(0.6) 2 (0.4) + 1000(0.6)3 (0.4)

= 2694

47. Solution: C

The expected payment is

∞
(3 / 2) n e −3/2  ∞ (3 / 2) n e −3/2 
∑ 10, 000( n − 1) =  ∑ 10, 000( n − 1)  − 10, 000(−1)e −3/2
n 1= n! n 0 n! 
= 10, 000(1.5 − 1) + 10, 000
= e −3/2 7, 231.

48. Solution: C

The expected payment is

 2.5(0.6) 2.5  ∞
 2.5(0.6) 2.5   −1.5 2
− x −2.5 
∞
2.5 − x
2

∫  x3.5  ∫2  x3.5 
x
0.6 
dx + 2 dx = 2.5(0.6) 
 1.5
+
2.5 2 

 0.6 
 −2 −1.5
0.6 −1.5
2 
−2.5
= 2.5(0.6) 2.5  + =
+2  0.9343.
 1.5 1.5 2.5 

Page 15 of 175
 49. Solution: A

First, determine K.
 1 1 1 1  60 + 30 + 20 + 15 + 12   137 
1= K 1 + + + + = K  = K  
 2 3 4 5  60   60 
60
K=
137
Then, after applying the deductible, the expected payment is
0.05[(3 − 2) P ( N =
3) + (4 − 2) P ( N = 4) + (5 − 2) P ( N =5)]
= 0.05(60 /137)[1(1/ 3) + 2(1/= 4) + 3(1/ 5)] 0.0314

50. Solution: D

The expected payment is

10 ∞ 10 ∞
2 2 2 20 2 2 20
∫
1
y 3 dy + ∫ 10 3 dy =−
y 10
y
− 2
y 1 2y
=− + −0+
10 1 200
=1.9.
10

51. Solution: B

The expected payment is (in thousands)

15
(0.94)(0) + (0.02)(15 − 1) + 0.04 ∫ ( x − 1)0.5003e − x /2 dx
1

= 0.28 + ( 0.020012 )  −2e − x /2 ( x − 1) + ∫ 2 e − x /2 dx 

15 15

 1 1 
= 0.28 + ( 0.020012 )  −2e −7.5 (14) + −4e − x /2 

15
(
1   )
=0.28 + ( 0.020012 )  −2e (14) − 4e + 4e 
−7.5 −7.5 −0.5

= 0.28 + ( 0.020012 )( 2.408 )

= 0.328.

52. Solution: C

∞ ∞
k k 1 k
1= ∫ dx =
− = and so k = 3.
0
(1 + x) 4
3 (1 + x) 0 3
3

The expected value is (where the substitution u = 1 + x is used.

∞ 3 ∞ ∞
∫0 x (1 + x)4 dx= ∫1 3(u − 1)u du= 3u / (−2) − 3u / (−3) 1= 3 / 2 −=1 1/ 2.
−4 −2 −3

Integration by parts may also be used.

Page 16 of 175
53. Solution: C

With no deductible, the expected payment is 500. With the deductible it is to be 125. Let d be the
deductible. Then,
1000
1000 ( x − d )2
=
125 ∫d
( x − d )(0.001)dx
=
2
(0.001) = 0.0005 (1000 − d ) 2 − 0 
d

250,=000 (1000 − d ) 2
=
500 1000 − d
d = 500.

54. Solution: B

The distribution function of X is

x
2.5(200) 2.5
x −(200) 2.5 (200) 2.5
∫ 200 t 3.5 dt =
F ( x) =
t 2.5
=
1−
x 2.5
, x > 200
200

The pth percentile xp of X is given by

p (200) 2.5
= F (xp )= 1 −
100 x 2.5
p

(200) 2.5
1 − 0.01 p =
x 2.5
p

200
(1 − 0.01 p )0.4 =
xp
200
xp =
(1 − 0.01 p)0.4
200 200
It follows that x 70 −=
x 30 0.4
− = 93.06 .
(0.30) (0.70)0.4

55. Solution: E

Let X and Y denote the annual cost of maintaining and repairing a car before and after the 20%
tax, respectively. Then Y = 1.2X and= =
Var (Y ) Var (1.2 X ) 1.44= = 374.4 .
Var ( X ) 1.44(260)

Page 17 of 175
56. Solution: C

First note that the distribution function jumps ½ at x = 1, so there is discrete probability at that
point. From 1 to 2, the density function is the derivative of the distribution function, x – 1. Then,
2
1 2 1  x3 x 2  1 8 4 1 1 4
E ( X ) = (1) + ∫ x( x − 1)dx = +  −  = + − − + =
2 1 2  3 2 1 2 3 2 3 2 3
2
1 2 1  x 4 x3  1 16 8 1 1 23
E ( X ) = (1) 2 + ∫ x 2 ( x − 1)dx = +  −  = + − − + =
2

2 1 2  4 3  1 2 4 3 4 3 12
2
23  4  23 16 5
Var ( X ) = E ( X ) − [ E ( X ) ] =
2
2
−  = − = .
12  3  12 9 36

57. Solution: C

4 5
∫ x(0.2)dx + ∫ 4(0.2)dx
4
E[Y=
] = 0.1x 2 + 0.8
= 2.4
0 4 0
4 5
∫ x 2 (0.2)dx + ∫ 42 (0.2)
4
=
E[Y 2 ] = dx (0.2 / 3) x3 =
+ 3.2 7.46667
0 4 0

Var[Y] = E[Y ] − ( E[Y ]) = 7.46667 − 2.4 = 1.707.

2 2 2

58. Solution: A

The mean is 20(0.15) + 30(0.10) + 40(0.05) + 50(0.20) + 60(0.10) + 70(0.10) + 80(0.30) = 55.
The second moment is 400(0.15) + 900(0.10) + 1600(0.05) + 2500(0.20) + 3600(0.10) +
4900(0.10) + 6400(0.30) = 3500. The variance is 3500 – 552 = 475. The standard deviation is
21.79. The range within one standard deviation of the mean is 33.21 to 76.79, which includes the
values 40, 50, 60, and 70. The sum of the probabilities for those values is 0.05 + 0.20 + 0.10 +
0.10 = 0.45.

59. Solution: B

Let Y be the amount of the insurance payment.

1500
1500 1 1 12502
E[Y ] =∫ ( x − 250)dx = ( x − 250) 2 = =521
250 1500 3000 3000
250
1500
1500 1 1 12503
E[Y ] =∫ ( x − 250) 2 dx = ( x − 250)3 = =
2
434, 028
250 1500 4500 250 4500
Var[Y]= 434, 028 − (521) 2 = 162,587
SD[Y ] = 403.

Page 18 of 175
60. Solution: B

The expected amount paid is (where N is the number of consecutive days of rain)
e −0.6 0.6
1000 P[ N = 1] + 2000 P[ N > 1] = 1000 + 2000 (1 − e −0.6 − e −0.6 0.6 ) = 573.
1!
The second moment is
e −0.6 0.6
10002 P[ N = 1] + 20002 P[ N > 1] = 10002 + 20002 (1 − e −0.6 − e −0.6 0.6 ) = 816,893.
1!
2
The variance is 816,893 – 573 = 488,564 and the standard deviation is 699.

61. Solution: C

X has an exponential distribution. Therefore, c = 0.004 and the distribution function is

F ( x) = 1 − e −0.004 x . For the moment, ignore the maximum benefit. The median is the solution to
0.5 = F (m) = 1 − e −0.004 m , which is m = −250 ln(0.5) =
173.29. Because this is below the
maximum benefit, it is the median regardless of the existence of the maximum. Note that had the
question asked for a percentile such that the solution without the maximum exceeds 250, then the
answer is 250.

62. Solution: D

The distribution function of an exponential random variable, T, is F (t ) = 1 − e − t θ , t > 0 . With a

median of four hours, 0.5 = F (4) = 1 − e −4/θ and so θ = −4 / ln(0.5) . The probability the
component works for at least five hours is P[T ≥ 5] = 1 − F (5) = 1 − 1 + e5ln(0.5)/4 = 0.55/4 = 0.42.

63. Solution: E

This is a conditional probability. The solution is

P[100 ≤ X ≤ p ] F ( p ) − F (100)
0.95 = P[ X ≤ p | X > 100] = =
P[ X > 100] 1 − F (100)
1 − e − p /300 − 1 + e −100/300 e −100/300 − e − p /300
= = = 1 − e − ( p −100)/300
1 − 1 + e −100/300 e −100/300
0.05 = e − ( p −100)/300
−2.9957 = −( p − 100) / 300
p = 999

Page 19 of 175
64. Solution: A

The distribution function of X is given by

x 3
∫1 t 4
−3 x
F ( x) = dt =−t 1 − x −3 , x > 1
=
1

Next, let X1, X2, and X3 denote the three claims made that have this distribution. Then if Y
denotes the largest of these three claims, it follows that the distribution function of Y is given by
G ( y ) =P[ X 1 ≤ y ]P[ X 2 ≤ y ]P[ X 3 ≤ y ] =(1 − y −3 )3 .
The density function of Y is given by
) G′( y=
g ( y= ) 3(1 − y −3 ) 2 (3 y −4 ).
Therefore,
∞ ∞
E[Y ]= ∫1
y3(1 − y −3 ) 2 3 y −4 dy= 9 ∫ y −3 − 2 y −6 + y −9 dy
1

=9  − y −2 / 2 + 2 y −5 / 5 − y −8 / 8  =9 [1/ 2 − 2 / 5 + 1/ 8]
∞

 1 

= 2.025 (in thousands).

65. Solution: C

The mean and standard deviation for the 2025 contributions are 2025(3125) = 6,328,125 and
45(250) = 11,250. By the central limit theorem, the total contributions are approximately
normally distributed. The 90th percentile is the mean plus 1.282 standard deviations or 6,328,125
+ 1.282(11,250) = 6,342,548.

66. Solution: C

The average has the same mean as a single claim, 19,400. The standard deviation is that for a
single claim divided by the square root of the sample size, 5,000/5 = 1,000. The probability of
exceeding 20,000 is the probability that a standard normal variable exceeds (20,000 –
19,400)/1,000 = 0.6. From the tables, this is 1 – 0.7257 = 0.2743.

67. Solution: B

A single policy has a mean and variance of 2 claims. For 1250 polices the mean and variance of
the total are both 2500. The standard deviation is the square root, or 50.
The approximate probability of being between 2450 and 2600 is the same as a standard normal
random variable being between (2450 – 2500)/50 = –1 and (2600 – 2500)/50 = 2. From the
tables, the probability is 0.9772 – (1 – 0.8413) = 0.8185.

Page 20 of 175
68. Solution: B

Let n be the number of bulbs purchased. The mean lifetime is 3n and the variance is n. From the
normal tables, a probability of 0.9772 is 2 standard deviations below the mean. Hence 40 = 3n –
2sqrt(n). Let m be the square root of n. The quadratic equation is 3m2 – 2m – 40. The roots are 4
and –10/3. So n is either 16 or 100/9. At 16 the mean is 48 and the standard deviation is 4, which
works. At 100/9 the mean is 100/3 and the standard deviation is 10/3. In this case 40 is two
standard deviations above the mean, and so is not appropriate. Thus 16 is the correct choice.

69. Solution: B

Observe that (where Z is total hours for a randomly selected person)

E[ Z ] = E[ X + Y ] = E[ X ] + E[Y ] = 50 + 20 = 70
Var[ Z ] = Var[ X + Y ] = Var[ X ] + Var[Y ] + 2Cov[ X , Y ] = 50 + 30 + 20 = 100.
It then follows from the Central Limit Theorem that T is approximately normal with mean
100(70) = 7000 and variance 100(100) = 10,000 and standard deviation 100. The probability of
being less than 7100 is the probability that a standard normal variable is less than (7100 –
7000)/100 = 1. From the tables, this is 0.8413.

70. Solution: B

A single policy has an exponential distribution with mean and standard deviation 1000. The
premium is then 1000 + 100 = 1100. For 100 policies, the total claims have mean 100(1000) =
100,000 and standard deviation 10(1000) = 10,000. Total premiums are 100(1100) = 110,000.
The probability of exceeding this number is the probability that a standard normal variable
exceeds (110,000 – 100,000)/10,000 = 1. From the tables this probability is 1 – 0.8413 = 0.1587.

71. Solution: E

For a single recruit, the probability of 0 pensions is 0.6, of 1 pension is 0.4(0.25) = 0.1, and of 2
pensions is 0.4(0.75) = 0.3. The expected number of pensions is 0(0.6) + 1(0.1) + 2(0.3) = 0.7.
The second moment is 0(0.6) + 1(0.1) + 4(0.3) = 1.3. The variance is 1.3 – 0.49 = 0.81. For 100
recruits the mean is 70 and the variance is 81. The probability of providing at most 90 pensions
is (with a continuity correction) the probability of being below 90.5. This is (90.5 – 70)/9 = 2.28
standard deviations above the mean. From the tables, this probability is 0.9887.

72. Solution: D

For one observation, the mean is 0 and the variance is 25/12 (for a uniform distribution the
variance is the square of the range divided by 12). For 48 observations, the average has a mean
of 0 and a variance of (25/12)/48 = 0.0434. The standard deviation is 0.2083. 0.25 years is
0.25/0.2083 = 1.2 standard deviations from the mean. From the normal tables the probability of
being within 1.2 standard deviations is 0.8849 – (1 – 0.8849) = 0.7698.

Page 21 of 175
73. Solution: C

For a good driver, the probability is 1 − e −3/6 and for a bad driver, the probability is 1 − e −2/3 . The
probability of both is the product, (1 − e −3/6 )(1 − e −2/3 ) =
1 − e −1/2 − e −2/3 + e −7/6 .

74. Solution: E

The tour operator collects 21x50 = 1050 for the 21 tickets sold. The probability that all 21
passengers will show up is (1 − 0.02 ) = ( 0.98) = 0.65 . Therefore, the tour operator’s expected
21 21

revenue is 1050 – 100(065) = 985.

75. Solution: C

First obtain the covariance of the two variables as (17,000 – 5,000 – 10,000)/2 = 1,000.
The requested variance is
Var ( X + 100 + 1.1Y=) Var ( X ) + Var (1.1Y ) + 2Cov( X ,1.1Y )
=
Var ( X ) + 1.21Var (Y ) + 2(1.1)Cov( X , Y )
=
5, 000 + 1.21(10, 000) + 2.2(1, 000) = 19,300.

76. Solution: B

P(X = 0) = 1/6
P(X = 1) = 1/12 + 1/6 = 3/12
P(X = 2) = 1/12 + 1/3 + 1/6 = 7/12 .
E[X] = (0)(1/6) + (1)(3/12) + (2)(7/12) = 17/12
E[X2] = (0)2(1/6) + (1)2(3/12) + (2)2(7/12) = 31/12
Var[X] = 31/12 – (17/12)2 = 0.58.

77. Solution: D

Due to the independence of X and Y

Var ( Z=
) Var (3 X − Y − 5)
= 32 Var ( X ) + (−1) 2 Var (Y=
) 9(1) + =
2 11.

78. Solution: E

Let X and Y denote the times that the generators can operate. Now the variance of an exponential
random variable is the square of them mean, so each generator has a variance of 100. Because
they are independent, the variance of the sum is 200.

79. Solution: E

Let S, F, and T be the losses due to storm, fire, and theft respectively. Let Y = max(S,F,T). Then,

Page 22 of 175
P[Y > 3] =1 − P[Y ≤ 3] =1 − P[max( S , F , T ) ≤ 3] =1 − P[ S ≤ 3]P[ F ≤ 3]P[T ≤ 3]
=1 − (1 − e −3/1 )(1 − e −3/1.5 )(1 − e −3/2.4 ) =0.414.
80. Solution: A

First obtain Var(X) = 27.4 – 25 = 2.4, Var(Y) = 51.4 – 49 = 2.4, Cov(X,Y) = (8 – 2.4 – 2.4)/2 =
1.6. Then,
Cov(C1 , C2 )= Cov( X + Y , X + 1.2Y )= Cov( X , X ) + 1.2Cov( X , Y ) + Cov(Y , X ) + 1.2Cov(Y , Y )
=
Var ( X ) + 1.2Var (Y ) + 2.2Cov( X , Y )
=+
2.4 1.2(2.4) + 2.2(1.6) =
8.8.

81. Solution: E

Because the husband has survived, the only possible claim payment is to the wife. So we need
the probability that the wife dies within ten years given that the husband survives. The numerator
of the conditional probability is the unique event that only the husband survives, with probability
0.01. The denominator is the sum of two events, both survive (0.96) and only the husband
survives (0.01). The conditional probability is 0.01/(0.96 + 0.01) = 1/97. The expected claim
payment is 10,000/97 = 103 and the expected excess is 1,000 – 103 = 897.

82. Solution: C

P (=
X 1,= Y 0) P (=
X 1,= Y 0) 0.05
P[Y= 0 | X= 1]= = = = 0.286
P( X =1) P( X =1, Y =0) + P( X =1, Y =1) 0.05 + 0.125
P[Y = 1| X = 1] =1 − 0.286 = 0.714.
The conditional variable is Bernoulli with p = 0.714. The variance is (0.714)(0.286) = 0.204.

83. Solution: D

With no tornadoes in County P the probabilities of 0, 1, 2, and 3 tornadoes in County Q are

12/25, 6/25, 5/25, and 2/25 respectively.
The mean is (0 + 6 + 10 + 6)/25 = 22/25.
The second moment is (0 + 6 + 20 + 18)/25 = 44/25.
The variance is 44/25 – (22/25)2 = 0.9856.

84. Solution: C

From the Law of Total Probability:

P[4 < S < 8] = P[4 < S < 8 | N = 1]P[ N = 1] + P[4 < S < 8 | N > 1]P[ N > 1]
= (e −4/5 − e −8/5 )(1/ 3) + (e −4/8 − e −8/8 )(1/ 6) = 0.122.

Page 23 of 175
85. Solution: C

Due to the equal spacing of probabilities, p= n p0 − nc for c = 1, 2, 3, 4, 5. Also,

0.4 = p0 + p1 = p0 + p0 − c = 2 p0 − c. Because the probabilities must sum to 1,
1 = p0 + p0 − c + p0 − 2c + p0 − 3c + p0 − 4c + p0 − 5c = 6 p0 − 15c. This provides two equations in
two unknowns. Multiplying the first equation by 15 gives = 6 30 p0 − 15c. Subtracting the second
equation gives 5= 24 p0 ⇒ p0= 5 / 24 . Inserting this in the first equation gives c = 1/60. The
requested probability is p4 + p5= 5 / 24 − 4 / 60 + 5 / 24 − 5 / 60= 32 /120= 0.267.

86. Solution: D

Because the number of payouts (including payouts of zero when the loss is below the deductible)
is large, apply the central limit theorem and assume the total payout S is normal. For one loss, the
mean, second moment, and variance of the payout are
20,000
5,000 1 20,000 1 ( x − 5, 000) 2
∫0
0
20, 000
dx + ∫
5,000
( x − 5, 000)
20, 000
=
0+
40, 000
=
5, 625
5,000
20,000
5,000 1 20,000 1 ( x − 5, 000)3
∫ dx + ∫ ( x − 5, 000) 2 =
0+ =
2
0 56, 250, 000
0 20, 000 5,000 20, 000 60, 000 5,000

56, 250, 000 − 5, 6252 =

24, 609,375.
For 200 losses the mean, variance, and standard deviation are 1,125,000, 4,921,875,000, and
70,156. 1,000,000 is 125,000/70,156 = 1.7817 standard deviations below the mean and
1,200,000 is 75,000/70,156 = 1.0690 standard deviations above the mean. From the standard
normal tables, the probability of being between these values is 0.8575 – (1 – 0.9626) = 0.8201.

87. Solution: B

Let H be the percentage of clients with homeowners insurance and R be the percentage of clients
with renters insurance.

Because 36% of clients do not have auto insurance and none have both homeowners and renters
insurance, we calculate that 8% (36% – 17% – 11%) must have renters insurance, but not auto
insurance.

(H – 11)% have both homeowners and auto insurance, (R – 8)% have both renters and auto
insurance, and none have both homeowners and renters insurance, so (H + R – 19)% must equal
35%. Because H = 2R, R must be 18%, which implies that 10% have both renters and auto
insurance.

Page 24 of 175
88. Solution: B

Let Y be the reimbursement. Then, G(115) = P[Y < 115 | X > 20]. For Y to be 115, the costs must
be above 120 (up to 120 accounts for a reimbursement of 100). The extra 15 requires 30 in
additional costs. Therefore, we need
P[ X ≤ 150] − P[ X ≤ 20] 1 − e −150/100 − 1 + e −20/100
P=[ X ≤ 150 | X > 20] =
P[ X > 20] 1 − 1 + e −20/100
−e −1.5 + −0.2
= −0,2 1 − e −1.3 =
= 0.727.
e

89. Solution: E

The conditional probability function given 2 claims in April is

3 1 −2 3e −2 1 3
∑ n2 =1 4 4
∞ −2 n2 −1
p= (2) e (1 − e = ) = −2
16 1 − (1 − e ) 16
N1

p (2, n ) 3 1 −2 16
p(n2 | N1 =2) =2 = e (1 − e −2 ) n2 −1 = e −2 (1 − e −2 ) n2 −1.
pN1 (2) 4 4 3

This can be recognized as a geometric probability function and so the mean is 1/ e −2 = e 2 .

90. Solution: C

The number of defective modems is 20% x 30 + 8% x 50 = 10.

10  70 
  
The probability that exactly two of a random sample of five are defective is    = 0.102 .
2 3
 80 
 
5
91. Solution: B

P(40 year old man dies before age 50) = P(T < 50 | T > 40)
Pr(40 < T < 50) F (50) − F (40)
=
Pr(T > 40) 1 − F (40)
 1 − 1.150   1 − 1.140   1 − 1.140   1 − 1.150 
1 − exp   − 1 + exp   exp   − exp  
=  1000   1000   1000   1000 
 1 − 1.140   1 − 1.140 
1 − 1 + exp   exp  
 1000   1000 
0.9567 − 0.8901
= 0.0696
0.9567

Expected Benefit = 5000(0.0696) = 348.

Page 25 of 175
92. Solution: C

Letting t denote the relative frequency with which twin-sized mattresses are sold, we have that
the relative frequency with which king-sized mattresses are sold is 3t and the relative frequency
with which queen-sized mattresses are sold is (3t+t)/4, or t. Thus, t = 0.2 since t + 3t + t = 1. The
probability we seek is 3t + t = 0.80.

93. Solution: E

Var ( N ) =E[Var ( N | λ )] + Var[ E ( N | λ )] =E[λ ] + Var (λ ) =1.5 + 0.75 =2.25. The variance of a
uniform random variable is the square of the range divided by 12, in this case 32/12 = 0.75.

94. Solution: D

X follows a geometric distribution with p = 1/6 and Y = 2 implies the first roll is not a 6 and the
second roll is a 6. This means a 5 is obtained for the first time on the first roll (probability = 0.2)
or a 5 is obtained for the first time on the third or later roll (probability = 0.8).

1
E[ X | X ≥ 3] = + 2 = 6 + 2 = 8. , The expected value is 0.2(1) + 0.8(8) = 6.6.
p

95. Solution: B

The unconditional probabilities for the number of people in the car who are hospitalized are 0.49,
0.42 and 0.09 for 0, 1 and 2, respectively. If the number of people hospitalized is 0 or 1, then the
total loss will be less than 1. However, if two people are hospitalized, the probability that the
total loss will be less than 1 is 0.5. Thus, the expected number of people in the car who are
hospitalized, given that the total loss due to hospitalizations from the accident is less than 1 is

0.49 0.42 0.09 ⋅ 0.5

(0) + (1) + (2) =
0.534
0.49 + 0.42 + 0.09 ⋅ 0.5 0.49 + 0.42 + 0.09 ⋅ 0.5 0.49 + 0.42 + 0.09 ⋅ 0.5

Page 26 of 175
 96. Solution: B

Let X equal the number of hurricanes it takes for two losses to occur. Then X is negative
binomial with “success” probability p = 0.4 and r = 2 “successes” needed.

 n − 1 r n−r  n − 1 n−2
P[ X ==
n]   p (1 − p) =   (0.4) (1 − 0.4) =−
2
(n 1)(0.4) 2 (0.6) n − 2 , for n ≥ 2.
 r −1  2 − 1

We need to maximize P[X = n]. Note that the ratio

P[ X = n + 1] n(0.4) 2 (0.6) n −1 n
= = n−2
(0.6) .
P[ X = n] (n − 1)(0.4) (0.6)
2
n −1

This ratio of “consecutive” probabilities is greater than 1 when n = 2 and less than 1 when n ≥ 3.
Thus, P[X = n] is maximized at n = 3; the mode is 3. Alternatively, the first few probabilities
could be calculated.

97. Solution: C

There are 10 (5 choose 3) ways to select the three columns in which the three items will appear.
The row of the rightmost selected item can be chosen in any of six ways, the row of the leftmost
selected item can then be chosen in any of five ways, and the row of the middle selected item can
then be chosen in any of four ways. The answer is thus (10)(6)(5)(4) = 1200. Alternatively, there
are 30 ways to select the first item. Because there are 10 squares in the row or column of the first
selected item, there are 30 − 10 = 20 ways to select the second item. Because there are 18
squares in the rows or columns of the first and second selected items, there are 30 − 18 = 12
ways to select the third item. The number of permutations of three qualifying items is
(30)(20)(12). The number of combinations is thus (30)(20)(12)/3! = 1200.

98. Solution: B

The expected bonus for a high-risk driver is 0.8(12)(5) = 48.

The expected bonus for a low-risk driver is 0.9(12)(5) = 54.
The expected bonus payment from the insurer is 600(48) + 400(54) = 50,400.

Page 27 of 175
99. Solution: E

Liability but not property = 0.01 (given)

Liability and property = 0.04 – 0.01 = 0.03.
Property but not liability = 0.10 – 0.03 = 0.07
Probability of neither = 1 – 0.01 – 0.03 – 0.07 = 0.89

100. Solution: B

C = the set of TV watchers who watched CBS over the last year
N = the set of TV watchers who watched NBC over the last year
A = the set of TV watchers who watched ABC over the last year
H = the set of TV watchers who watched HGTV over the last year

The number of TV watchers in the set C ∪ N ∪ A is 34 + 15 + 10 – 7 – 6 – 5 + 4 = 45.

Because C ∪ N ∪ A and H are mutually exclusive, the number of TV watchers in the set
C ∪ N ∪ A ∪ H is 45 + 18 = 63.

The number of TV watchers in the complement of C ∪ N ∪ A ∪ H is thus 100 – 63 = 37.

101. Solution: A

Let X denote the amount of a claim before application of the deductible. Let Y denote the amount
of a claim payment after application of the deductible. Let λ be the mean of X, which because X
is exponential, implies that λ2 is the variance of X and E ( X 2 ) = 2λ 2 .

By the memoryless property of the exponential distribution, the conditional distribution of the
portion of a claim above the deductible given that the claim exceeds the deductible is an
exponential distribution with mean λ . Given that E (Y ) = 0.9λ , this implies that the probability of
a claim exceeding the deductible is 0.9 and thus= =
E (Y 2 ) 0.9(2 λ 2 ) 1.8λ 2 . Then,
Var(Y ) = 1.8λ 2 − (0.9λ ) 2 =0.99λ 2 . The percentage reduction is 1%.

Page 28 of 175
 102. Solution: C

Let N denote the number of hurricanes, which is Poisson distributed with mean and variance 4.

Let X i denote the loss due to the ith hurricane, which is exponentially distributed with mean
1,000 and therefore variance (1,000)2 = 1,000,000.

Let X denote the total loss due to the N hurricanes.

This problem can be solved using the conditional variance formula. Note that independence is
used to write the variance of a sum as the sum of the variances.

=
Var(X ) Var[ E ( X | N )] + E[Var ( X | N )]
= Var[ E ( X 1 +  + X N )] + E[Var ( X 1 +  + X N )]
= Var[ NE ( X 1 )] + E[ NVar ( X 1 )]
= Var (1, 000 N ) + E (1, 000, 000 N )
= 1, 0002 Var ( N ) + 1, 000, 000 E ( N )
= 1, 000, 000(4) + 1, 000, 000(4) = 8, 000, 000.

103. Solution: B

Let N denote the number of accidents, which is binomial with parameters 3 and 0.25 and thus has
mean 3(0.25) = 0.75 and variance 3(0.25)(0.75) = 0.5625.

Let X i denote the unreimbursed loss due to the ith accident, which is 0.3 times an exponentially
distributed random variable with mean 0.8 and therefore variance (0.8)2 = 0.64. Thus, X i has
mean 0.8(0.3) = 0.24 and variance 0.64(0.3) 2 = 0.0576 .

Let X denote the total unreimbursed loss due to the N accidents.

This problem can be solved using the conditional variance formula. Note that independence is
used to write the variance of a sum as the sum of the variances.
=
Var(X ) Var[ E ( X | N )] + E[Var ( X | N )]
= Var[ E ( X 1 +  + X N )] + E[Var ( X 1 +  + X N )]
= Var[ NE ( X 1 )] + E[ NVar ( X 1 )]
= Var (0.24 N ) + E (0.0576 N )
= 0.242 Var ( N ) + 0.0576 E ( N )
= 0.0576(0.5625) + 0.0576(0.75)= 0.0756.

Page 29 of 175
104. Solution: B

The 95th percentile is in the range when an accident occurs. It is the 75th percentile of the payout,
given that an accident occurs, because (0.95 − 0.80)/(1 − 0.80) = 0.75. Letting x be the 75th
x
−
percentile of the given exponential distribution, F ( x) =
1− e = 3000
0.75 , so x = 4159. Subtracting
th
the deductible of 500 gives 3659 as the (unconditional) 95 percentile of the insurance company
payout.

105. Solution: C

The ratio of the probability that one of the damaged pieces is insured to the probability that none
of the damaged pieces are insured is
 r   27 − r 
  
1   3 
 27 
 
4 =
4r
,
 r   27 − r  24 − r
  
0 4 
 27 
 
4
where r is the total number of pieces insured. Setting this ratio equal to 2 and solving yields r =
8.

The probability that two of the damaged pieces are insured is

 r   27 − r   8  19 
     
 2 2=   2 = 2 (8)(7)(19)(18)(4)(3)(2)(1) 266
= = 0.27 .
 27   27  (27)(26)(25)(24)(2)(1)(2)(1) 975
   
4 4

Page 30 of 175
 106. Solution: A

The probability that Rahul examines exactly n policies is 0.1(0.9) n−1 . The probability that Toby
examines more than n policies is 0.8n . The required probability is thus
∞
1∞ 0.72
∑ 0.1(0.9)=
n 1=
=∑
9n 1
n −1
= 0.2857 .
(0.8) n
0.72n
9 (1 − 0.72 )

An alternative solution begins by imagining Rahul and Toby examine policies simultaneously
until at least one of the finds a claim. At each examination there are four possible outcomes:
1. Both find a claim. The probability is 0.02.
2. Rahul finds a claim and Toby does not. The probability is 0.08.
3. Toby finds a claim and Rahul does not. The probability is 0.18
4. Neither finds a claim. The probability is 0.72.
Conditioning on the examination at which the process ends, the probability that it ends with
Rahul being the first to find a claim (and hence needing to examine fewer policies) is 0.08/(0.02
+ 0.08 + 0.18) = 8/28 = 0.2857.

107. Solution: E

Let a be the mean and variance of X and b be the mean and variance of Y. The two facts are a = b
– 8 and a + a2 = 0.6(b + b2). Substituting the first equation into the second gives
b − 8 + (b − 8)=
2
0.6b + 0.6b 2
b − 8 + b 2 − 16b + 64
= 0.6b + 0.6b 2
0.4b 2 − 15.6b + 56 =
0
15.6 ± 15.62 − 4(0.4)(56) 15.6 ± 12.4
=b = = 4 or 35.
2(0.4) 0.8
At b = 4, a is negative, so the answer is 35.

Page 31 of 175
108. Solution: C

Suppose there are N red sectors. Let w be the probability of a player winning the game.
Then, w = the probability of a player missing all the red sectors and
 9  9 2  9  
N

w =1 −  +   +  +   
 20  20   20  
Using the geometric series formula,
N +1 N
9  9   9 
−   1 −   N
20  20  9  20  2 9 9 
w= 1− =1− = +  
1 −
9 20 1 −
9 11 11  20 
20 20
Thus we need
N
2 9 9 
0.2 > w = +  
11 11  20 
N
 9 
2.2 > 2 + 9  
 20 
N
 9 
0.2 > 9  
 20 
N
2  9 
> 
90  20 
N
 20 
  > 45
 9 
ln(45)
N> ≈ 4.767
ln(20 / 9)
Thus N must be the first integer greater than 4.767, or 5.

109. Solution: B

The fourth moment of X is

10
10x4 x5
∫0 10
= dx = 2000.
50 0
The Y probabilities are 1/20 for Y = 0 and 10, and 1/10 for Y = 1,2,…,9.

E[Y 4 ] = (14 + 24 +  + 94 ) /10 + 104 / 20 = 2033.3.

The absolute value of the difference is 33.3.

Page 32 of 175
 110. Solution: E

P( x= 1, y= 1)= P( y= 1| x= 1) P( x= 1)= 0.3(0.5) 2= 0.075

P(=
x 2, =
y 0)= P( =
y 0|=
x 2) P(=
x 2)= 0.25(0.5)=
3
0.03125
P(=
x 0, = y 2)= P( = y 2|=
x 0) P(=
x 0)= 0.05(0.5)=
1
0.025
The total is 0.13125.

111. Solution: C

∞ p −1 ∞
E ( X=
) ∫1
x
x p
=
dx ( p − 1) ∫1
x1− p dx
∞
x 2− p p −1
( p − 1) = = 2
2− p 1 p−2
p − 1= 2( p − 2)= 2 p − 4
p=3

112. Solution: D

The distribution function plot shows that X has a point mass at 0 with probability 0.5. From 2 to
3 it has a continuous distribution. The density function is the derivative, which is the constant (1
– 0.5)/(3 – 2) = 0.5. The expected value is 0(0.5) plus the integral from 2 to 3 of 0.5x. The
integral evaluates to 1.25, which is the answer. Alternatively, this is a 50-50 mixture of a point
mass at 0 and a uniform(2,3) distribution. The mean is 0.5(0) + 0.5(2.5) = 1.25.

113. Solution: E

The dice rolls that satisfy this event are (1,1), (1,2), (1,3), (2,1), (2,2), (2,3), (2,4), (3,1), (3,2),
(3,3), (3,4), (3,5), (4,2), (4,3), (4,4), (4,5), (4,6), (5,3), (5,4), (5,5), (5,6), (6,4), (6,5), and (6,6).
They represent 24 of the 36 equally likely outcomes for a probability of 2/3.

114. Solution: D

Cov( M , N )
0.64= ρ=
Var ( M )Var ( N )
= =
Cov( M , N ) 0.64 1600(900) 768
Var ( M + N ) = Var ( M ) + Var ( N ) + 2Cov( M , N ) = 1600 + 900 + 2(768) = 4036

Page 33 of 175
 115. Solution: C

6 ∞ 6 6 ∞
∫1
( x − 1)0.5e −0,5 x dx + ∫ 5(0.5)e −0.5 x dx =
6
−( x − 1)e −0.5 x + ∫ e −0.5 x dx − 5e −0.5 x
1 1 6

−0.5 x 6
=−5e −3 + 0 − 2e + 5e −3 =−2e −3 + 2e −1/2
1

116. Solution: A

Let C be the number correct. C has a binomial distribution with n = 40 and p = 0.5. Then the
mean is 40(0.5) = 20 and the variance is 40(0.5)(0.5) = 10. With the exact probability we have
 N + 0.5 − 20 
0.1 = P (C > N ) = Pr  Z > 
 10 
N + 0.5 − 20
=
1.282 ,= N 1.282 10 + 19.5= 23.55.
10
At N = 23 the approximate probability will exceed 0.1 (Z = 1.107).

117. Solution: B

The months in question have 1, 1, 0.5, 0.5, and 0.5 respectively for their means. The sum of
independent Poisson random variables is also Poisson, with the parameters added. So the total
number of accidents is Poisson with mean 3.5. The probability of two accidents is
e −3.5 3.52
= 0.185.
2!

118. Solution: B

The payments are 0 with probability 0.72 (snowfall up to 50 inches), 300 with probability 0.14,
600 with probability 0.06, and 700 with probability 0.08. The mean is 0.72(0) + 0.14(300) +
0.06(600) + 0.08(700) = 134 and the second moment is 0.72(0^2) + 0.14(300^2) + 0.06(600^2) +
0.08(700^2) = 73,400. The variance is 73,400 – 134^2 = 55,444. The standard deviation is the
square root, 235.

119. Solution: D

20
∫
20
=1 c( x 2 − 60 x + 800)
= dx c ( x3 / 3 − 30 x 2 + 800 x=
) c 20, 000 / 3 ⇒
= c 3 / 20, 000
0 0

20 3
P( X > d ) =∫ c( x 2 − 60 x + 800)dx =c ( x3 / 3 − 30 x 2 + 800 x)
20
=−
1 (d 3 / 3 − 30d 2 + 800d )
d d 20, 000
P ( X > 10) 0.2
P ( X > 10 | X >=
2) = = 0.2572
P( X > 2) 0.7776

Page 34 of 175
120. Solution: A

Each event has probability 0.5. Each of the three possible intersections of two events has
probability 0.25 = (0.5)(0.5), so each pair is independent. The intersection of all three events has
probability 0, which does not equal (0.5)(0.5)(0.5) and so the three events are not mutually
independent.

121. Solution: C

Let event A be the selection of the die with faces (1,2,3,4,5,6), event B be the selection of the die
with faces (2,2,4,4,6,6) and event C be the selection of the die with all 6’s. The desired
probability is, using the law of total probability,
P(6, 6) = P(6, 6 | A) P( A) + P(6, 6 | B) P( B) + P(6, 6 | C ) P(C )
= (1/ 36)(1/ 2) + (1/ 9)(1/ 4) + 1(1/ 4) =1/ 72 + 2 / 72 + 18 / 72 = 21/ 72 = 0.292.

122. Solution: D

6 4 2
   
 2  =
2   2  15(6)(1)
= 0.097
12  924
 
6

123. Solution: D

Consider the three cases based on the number of claims.

If there are no claims, the probability of total benefits being 48 or less is 1.
If there is one claim, the probability is 48/60 = 0.8, from the uniform distribution.
If there are two claims, the density is uniform on a 60x60 square. The event where the total is 48
or less is represented by a triangle with base and height equal to 48. The triangle’s area is
48x48/2 = 1152. Dividing by the area of the square, the probability is 1152/3600 = 0.32.

Using the law of total probability, the answer is 0.7(1) + 0.2(0.8) + 0.1(0.32) = 0.892.

124. Solution: B

The sum of independent Poisson variables is also Poisson, with the means added. Thus the
number of tornadoes in a three week period is Poisson with a mean of 3x2 = 6. Then,
 60 61 62 63 
P( N < 4) = p (0) + p (1) + p (2) + p (3) = e −6  + + +  = 0.1512.
 0! 1! 2! 3! 

Page 35 of 175
125. Solution: A

The number of components that fail has a binomial(2, 0.05) distribution. Then,
 3  3
P( N ≥ 2)= p(2) + p(3)=   (0.05) 2 (0.95) +   (0.05)3= 0.00725.
 2  3

126. Solution: E

The profit variable X is normal with mean 100 and standard deviation 20. Then,
 0 − 100 60 − 100 
P <Z≤ 
P (0 < X ≤ 60)  20 20  F (−2) − F (−5)
P( X ≤ =
60 | X > 0) = = .
P ( X > 0)  0 − 100  1 − F (−5)
PZ > 
 20 
For the normal distribution, F(–x) = 1 – F(x) and so the answer can be rewritten as
[1 – F(2) – 1 + F(5)]/[1 – 1 + F(5)] = [F(5) – F (2)]/F(5).

127. Solution: A

Let B be the event that the policyholder has high blood pressure and C be the event that the
policyholder has high cholesterol. We are given P(B) = 0.2, P(C) = 0.3, and P(C | B) = 0.25.
Then,
P( B ∩ C ) P(C | B) P( B) 0.25(0.2)
=
P( B | C ) = = = 1/ 6.
P(C ) P(C ) 0.3

128. Solution: D

This is a hypergeometric probability,

 20   5 
  
 1  = 1 20(5) 100
= = 0.333 ,
 25  25(24) / 2 300
 
2
Alternatively, the probability of the first worker being high risk and the second low risk is
(5/25)(20/24) = 100/600 and of the first being low risk and the second high risk is (20/25)(5/24)
= 100/600 for a total probability of 200/600 = 0.333.

Page 36 of 175
129. Solution: C

 X  1 x 1
= 60 ∫0 x 3 (1 − x) 2 dx= 60 ∫ x 4 (1 − x)dx= 60( x5 / 5 − x 6 / 6) = 60(1/ 5 − 1/ 6)= 2
1
E
 1− X  1− x 0 0

 X  2  1 x2 1
∫ x3 (1 − x) 2 dx= 60 ∫ x5 dx= 60( x 6 / 6) = 60(1/ 6)= 10
1
E   = 60
 1 − X   0 (1 − x ) 2 0 0

 X 
 = 10 − 2 = 6
2
Var 
 1 − X 

130. Solution: B

P(at least one emergency room visit or at least one hospital stay) = 1 – 0.61 = 0.39 = P(at least
one emergency room visit) + P(at least one hospital stay) – P(at least one emergency room visit
and at least one hospital stay).

P(at least one emergency room visit and at least one hospital stay) = 1 – 0.70 + 1 – 0.85 – 0.39 =
0.060.

131. Solution: A

Let Y be the loss and X be the reimbursement. If the loss is less than 4,
P ( X ≤ x)= P (Y ≤ x)= 0.2 x for x < 4 because Y has a uniform distribution on [0, 5]. However,
the probability of the reimbursement being less than or equal to 4 is 1 because 4 is the maximum
reimbursement.

132. Solution: B

The number of males is 0.54(900) = 486 and of females is then 414.

The number of females over age 25 is 0.43(414) = 178.
The number over age 25 is 395. Therefore the number under age 25 is 505. The number of
females under age 25 is 414 – 178 = 236. Therefore the number of males under 25 is 505 – 236 =
269 and the probability is 269/505 =0.533.

133. Solution: C

Let R be the event the car is red and G be the event the car is green. Let E be the event that the
claim exceeds the deductible. Then,
P( R) P( E | R) 0.3(0.09) 0.027
P ( R=| E) = = = 0.491.
P ( R ) P ( E | R ) + P (G) P ( E | G) 0.3(0.09) + 0.7(0.04) 0.055
Note that if A is the probability of an accident,
P=( E | R ) P ( E | R and A) P= = 0.09.
( A | R ) 0.1(0.9)

Page 37 of 175
 134. Solution: B

Let X and Y be the selected numbers. The probability Paul wins is P (| X − Y |≤ 3) . Of the 400
pairs, it is easiest to count the number of outcomes that satisfy this event:
If X = 1, then Y can be 1, 2, 3, or 4 (4 total)
If X = 2, then Y can be 1, 2, 3, 4, or 5 (5 total)
For X = 3 there are 6, and for X = 4 through 17 there are 7. For X = 18, 19, and 20 the counts are
6, 5, and 4 respectively. The total is then 4 + 5 + 6 + 14(7) + 6 + 5 + 4 = 128. The probability is
128/400 = 0.32.

135. Solution: C

Let C and K denote respectively the event that the student answers the question correctly and the
event that he actually knows the answer. The known probabilities are
=
P(C | K c ) 0.5,= P(C | K ) 1,= =
P( K | C ) 0.824, P( K ) N / 20. Then,
P(C | K ) P( K ) 1( N / 20) N
=
0.824 P= (K | C) = =
P(C | K ) P( K ) + P(C | K ) P( K ) 1( N / 20) + 0.5(20 − N ) / 20 N + 0.5(20 − N )
c c

0.824(0.5 N + 10) = N
8.24 = 0.588 N
N = 14.

136. Solution: D

The probability that a randomly selected cable will not break under a force of 12,400 is
P (Y > 12, 400) =>P[ Z (12, 400 − 12, 432) / 25 =
−1.28] = 0.9. The number of cables, N, that will
not break has the binomial distribution with n = 400 and p = 0.9. This can be approximated by a
normal distribution with mean 360 and standard deviation 6. With the continuity correction,
P ( N ≥ 349) =≥P[ Z (348.5 − 360) / 6 = −1.9167] = 0.97.

137. Solution: D

Because the mode is 2 and 3, the parameter is 3 (when the parameter is a whole number the
probabilities at the parameter and at one less than the parameter are always equal).
Alternatively, the equation p(2) = p(3) can be solved for the parameter. Then the probability of
selling 4 or fewer policies is 0.815 and this is the first such probability that exceeds 0.75. Thus,
4 is the first number for which the probability of selling more than that number of policies is less
than 0.25.

Page 38 of 175
138. Solution: E

Of the 36 possible pairs, there are a total of 15 that have the red number larger than the green
number. Note that a list is not needed. There are 6 that have equal numbers showing and of the
remaining 30 one-half must have red larger than green. Of these 15, 9 have an odd sum for the
answer, 9/15 = 3/5. This is best done by counting, with 3 combinations adding to 7, 2
combinations each totaling 5 and 9, and 1 combination each totaling 3 and 11.

139. Solution: B

From the table the 93rd percentile comes from a z-score between 1.47 and 1.56. 1.47 implies a
test score of 503 + 1.47(98) = 647.1. Similarly, 1.56 implies a score of 655.9. The only multiple
of 10 in this range is 650. Abby’s z-score is then (650 – 521)/101 = 1.277. This is at the 90th
percentile of the standard normal distribution.

140. Solution: C

Let X, Y, and Z be the three lifetimes. We want

P ( X + Y > 1.9 Z ) = P (W = X + Y − 1.9 Z > 0) .
A linear combination of independent normal variables is also normal. In this case W has a mean
of 10 + 10 – 1.9(10) = 1 and a variance of 9 + 9 + 1.9(1.9)(9) = 50.49 for a standard deviation of
7.106.
Then the desired probability is that a standard normal variable exceeds (0 – 1)/7.106 = –0.141.
Interpolating in the normal tables gives 0.5557 + (0.5596 – 0.5557)(0.1) = 0.5561, which rounds
to 0.556.

141. Solution: C

We have
2 − 1.2 − d 0.8 − d
= P [insurer must pay at least 1.2
0.3 = ] P [loss ≥ 1.2 + =
d] =
2−0 2
d= 0.8 − 2(0.3) =
0.2.
Then,
2 − 1.44 − 0.2
P [insurer must pay at least 1.44
= ] P [loss ≥ 1.44 + =
d] = 0.18.
2−0

142. Solution: E

The cumulative distribution function for the exponential distribution of the lifespan is
F ( x) = 1 − e − λ x , for positive x.
The probability that the lifespan exceeds 4 years is 0.3 = e −4 λ . Thus λ = −(ln 0.3) / 4 .
1 − F (4) =
For positive x, the probability density function is
ln 0.3 (ln 0.3) x/4 ln 0.3
f ( x) =λ e−λ x = − e =
− (0.3) x /4 .
4 4

Page 39 of 175
143. Solution: C

It is not necessary to determine the constant of proportionality. Let it be c. To determine the

mode, set the derivative of the density function equal to zero and solve.
d 2
=0 f ′(= x) −1
cx (1 + x3 )= 2cx(1 + x3 ) −1 + cx 2 [−(1 + x3 ) −2 ]3 x 2
dx
= 2cx(1 + x ) − 3cx 4 (multiplying by (1 + x3 ) 2 )
3

=2cx + 2cx 4 − 3cx 4 =2cx − cx 4

= 2 − x3 ⇒ x = 21/3 = 1.26.

144. Solution: C

It is not necessary to determine the constant of proportionality. Let it be c. To determine the

mode, set the derivative of the density function equal to zero and solve.
d
0= f ′( x) = cxe − x =ce − x − cx(2 x)e − x =ce − x (1 − 2 x 2 )
2 2 2 2

dx
= 1 − 2x2
2
(multiplying by ce x )
⇒
= x (1/ =
2)1/2 0.71.

145. Solution: E

A geometric probability distribution with mean 1.5 will have p = 2/3. So Pr(1 visit) = 2/3, P(two
visits) = 2/9, etc. There are four disjoint scenarios in which total admissions will be two or less.

Scenario 1: No employees have hospital admissions. Probability = 0.85 = 0.32768 .

Scenario 2: One employee has one admission and the other employees have none. Probability =
5
  (0.2)(0.8) (2 / 3) = 0.27307 .
4

1

Scenario 3: One employee has two admissions and the other employees have none. Probability =
5
  (0.2)(0.8) (2 / 9) = 0.09102 .
4

1

Scenario 4: Two employees each have one admission and the other three employees have none.
5
Probability =   (0.2) (0.8) (2 / 3)(2 / 3) = 0.09102 .
2 3

 2

The total probability is 0.78279.

Page 40 of 175
 146. Solution: C

The intersection of the two events (third malfunction on the fifth day and not three malfunctions
on first three days) is the same as the first of those events. So the numerator of the conditional
probability is the negative binomial probability of the third success (malfunction) on the fifth
day, which is
 4
  (0.4) (0.6) (0.4) = 0.13824 .
2 2

 2
The denominator is the probability of not having three malfunctions in three days, which is
1 − (0.4)3 =.
0.936
The conditional probability is 0.13824/0.936 = 0.1477.

147. Solution: C

Let pi represent the probability that the patient's cancer is in stage i, for i = 0, 1, 2, 3, or 4.
The probabilities must sum to 1. That fact and the three facts given the question produce the
following equations.

p0 + p1 + p2 + p3 + p4 =
1
p0 + p1 + p2 =
0.75
.
p1 + p2 + p3 + p4 =
0.8
p0 + p1 + p3 + p4 =
0.8

Therefore, we have
p0 =( p0 + p1 + p2 + p3 + p4 ) − ( p1 + p2 + p3 + p4 ) =−
1 0.8 =0.2
p2 =( p0 + p1 + p2 + p3 + p4 ) − ( p0 + p1 + p3 + p4 ) =1 − 0.8 =0.2 .
p1 = ( p0 + p1 + p2 ) − p0 − p2 = 0.75 − 0.2 − 0.2 = 0.35.

148. Solution: D

Using the law of total probability, the requested probability is

∞

∑ P(k + 0.75 < X ≤ k + 1| k < X ≤ k + 1) P(k < X ≤ k + 1) .

k =0
The first probability is
P(k + 0.75 < X ≤ k + 1)
P(k + 0.75 < X ≤ k + 1| k < X ≤ k + 1) =
P(k < X ≤ k + 1)
F (k + 1) − F (k + 0.75) 1 − e − ( k +1)/2 − 1 + e − ( k + 0.75)/2 e −0.375 − e −0.5
= = = = 0.205.
F (k + 1) − F (k ) 1 − e − ( k +1)/2 − 1 + e − k /2 1 − e −0.5

This probability factors out of the sum and the remaining probabilities sum to 1 so the requested
probability is 0.205.

Page 41 of 175
 149. Solution: B

The requested probability can be determined as

P(3 of first 11 damaged) P(12th is damaged | 3 of first 11 damaged)
 7  13 
  
= =
3   8  4 35(1, 287) 4
= 0.119.
 20  9 167,960 9
 
 11 

150. Solution: E

Let M be the size of a family that visits the park and let N be the number of members of that
family that ride the roller coaster. We want P(M = 6 | N = 5). By Bayes theorem

P=
(M 6= | N 5)
=
P(N 5= | M 6)P=(M 6)
= 7
∑ P=
m =1
(N 5= | M m)P=
(M m)

1 2 1
= 6 28 = 3 = 35 = 35 ≈ 0.3097.
0+0+0+0+ 1 3 + 1 2 + 1 1 3 1
+ + 1 63 + 35 + 15 113
5 28 6 28 7 28 5 3 7

151. Solution: C

Let S represent the event that the selected borrower defaulted on at least one student loan.
Let C represent the event that the selected borrower defaulted on at least one car loan.
P(C ∩ S )
We need to find P(C | S ) = .
P( S )
P(C ∩ S ) P(C ∩ S c )
=
We are given P( S ) 0.3, =
P( S | C ) = 0.4, P = c
(C | S ) = 0.28 .
P(C ) P( S c )
Then,
P(C ∩ S c )= 0.28 P( S c )= 0.28(1 − 0.3)= 0.196 .

Because
P(C )= P(C ∩ S ) + P(C ∩ S c ] and P (=C ) P (C ∩ S ) / 0.4 we have
P (C ∩ S ) / 0.4= P (C ∩ S ) + 0.196 ⇒ P (C ∩ S )= 0.196 /1.5= 0.13067.

Therefore,
P (C ∩ S ) 0.13067
=
P (C | S ) = = 0.4356,
P( S ) 0.3

Page 42 of 175
 152. Solution: E

Without the deductible, the standard deviation is, from the uniform distribution,
b / 12 = 0.28868b . Let Y be the random variable representing the payout with the deductible.
b
b 1 y2
E (Y ) =∫ ( y − 0.1b) dy = − 0.1 y =0.5b − 0.1b − 0.005b + 0.01b =0.405b
0.1b b 2b 0.1b
b
b 1 y3
E (Y ) =∫0.1b − = − 0.1 y 2 + 0.01by
2 2
( y 0.1b ) dy
b 3b 0.1b

= b 2 / 3 − 0.1b 2 + 0.01b 2 − 0.001b 2 / 3 + 0.001b 2 − 0.001b 2 = 0.243b 2

Var (Y ) =0.243b 2 − (0.405b) 2 =0.078975b 2
SD(Y ) = 0.28102b.
The ratio is 0.28102/0.28868 = 0.97347.

153. Solution: C

i) is false because G includes having one accident in year two.

ii) is false because there could be no accidents in year one.
iii) is true because it connects the descriptions of F and G (noting that “one or more” and “at
least one” are identical events) with “and.”
iv) is true because given one accident in year one (F), having a total of two or more in two years
is the same as one or more in year two (G).
v) is false because it requires year two to have at least two accidents.

154. Solution: B

P[ D] = P[ H ]P[ D | H ] + P[ M ]P[ D | M ] + P[ L]P[ D | L]

1  11 
0.009 = P[ H ]P[ D | H ] + P[ M ]  P[ D | H ]  + P[ L]  P[ D | H ] 
2  23 
1  1 
0.009 = 0.20 P[ D | H ] + 0.35  P[ D | H ]  + 0.45  P[ D | H ]  =0.45 P[ D | H ]
2  6 
= =
P[ D | H ] 0.009 / 0.45 0.02

155. Solution: C

If the deductible is less than 60 the equation is,

0.10(60 − d ) + 0.05(200 − d ) + 0.01(3000 − d ) = 30 ⇒ d = 100. .
So this cannot be the answer. If the deductible is between 60 and 200, the equation is
0.05(200 − d ) + 0.01(3000 − d ) = 30 ⇒ d = 166.67 . This is consistent with the assumption and is
the answer.

Page 43 of 175
 156. Solution: C

The probability that none of the damaged houses are insured is

10 − k  k 
  
1  0  3  k (k − 1)(k − 2)
= =
120 10  720 .
 
3
k (k − 1)(k − 2) =
6
This cubic equation could be solved by expanding, subtracting 6, and refactoring. However,
because k must be an integer, the three factors must be integers and thus must be 3(2)(1) for k =
3.

The probability that at most one of the damaged houses is insured equals
10 − 3   3 
  
1  1  2 1 7(3) 22 11
+ = + = = .
120 10  120 120 120 60
 
3

157. Solution: B

This question is equivalent to “What is the probability that 9 different chips randomly drawn
from a box containing 4 red chips and 8 blues chips will contain the 4 red chips?” The
hypergeometric probability is
 48
  
 4 =
 5  1(56)
= 0.2545.
12  220
 
9

158. Solution: D

Let N be the number of sick days for an employee in three months. The sum of independent
Poisson variables is also Poisson and thus N is Poisson with a mean of 3.. Then,
 0 31 32  −3
−3 3
P[N ≤ =2] e  + + =  e (1 + 3 + 4.5)
= 0.423 .
 0! 1! 2! 
 
The answer is the complement, 1 – 0.423 = 0.577.

Page 44 of 175
 159. Solution: B

A= 1 − [ P( N =
P( N > 3) = 0) + P( N =
1) + P( N = 3) ]
2) + P( N =
 3 9 27 
=1 − e −3 1 + + +  =1 − 13e −3 =0.3528
 1 2 6 
B=P( N > 1.5) = 1 − [ P( N =+ 1) ]
0) P( N =
 1.5 
= 1 − e −1.5 1 + =1 − 2.5e −1.5 =
0.4422
 1 
B – A = 0.4422 – 0.3528 = 0.0894.

160. Solution: E

For Policy A, the relevant equation is

0.64 =P( L > 1.44) =e −1.44/ µ
ln(0.64) = −1.44 / µ
−0.44629 =
µ = 3.2266.
For Policy B, the relevant equation is
0.512 = P( L > d ) = e − d /3.2266
ln(0.512) = −0.6694 =
−d / 3.2266
d = 2.1599.

161. Solution: B
5 5a +1 a +1
1, 1 ∫ cx =
Because the density function must integrate to = dx c a
⇒
= c .
0 a +1 5a +1
From the given probability,
a +1
3.75 3.75a +1 a + 1 3.75a +1  3.75 
0.4871 ∫ =
= cx dx c= a +1= 
a

0 a +1 5 a +1  5 
ln(0.4871) =−0.71929 = (a + 1) ln(3.75 / 5) =−0.28768(a + 1)
a = (−0.71929) / (−0.28768) − 1 =1.5.
The probability of a claim exceeding 4 is,
1.5+1
5 5a +1 − 4a +1 a + 1 5a +1 − 4a +1 4
∫4 = = = − =
a
cx dx c 1   0.42757.
a +1 5a +1 a +1 5

Page 45 of 175
162. Solution: A

Let N denote the number of warranty claims received. Then,

0.6 =P( N =0) =e − c ⇒ c =− ln(0.6) =0.5108.

The expected yearly insurance payments are:

5000[ P( N = 2) + 2 P( N =
3) + 3P( N =
4) + ]
= 5000[ P( N =+1) 2 P( N =+
2) 3P( N =+3) ] − 5000[ P( N =+
1) P( N =+
2) P( N =+
3) ]
=5000 E ( N ) − 5000[1 − P ( N =0)] =5000(0.5108) − 5000(1 − 0.6) =554.

163. Solution: D

If L is the loss, the unreimbursed loss, X is

 L, L ≤ 180
X =
180, L > 180.

The expected unreimbursed loss is

180 180 1 b − 180
144 = E ( X ) = ∫
0
l[ f (l )]dl + 180 Pr( L > 180) = ∫
0
l dl + 180
b b
2 180
l 1802 1802 1802
= + 180 − = + 180 −
2b 0 b 2b b
144b= 1802 / 2 + 180b − 1802
16, 200 = 36b
b = 450.

164. Solution: B

Let X be normal with mean 10 and variance 4. Let Z have the standard normal distribution. Let
= 12th percentile. Then
 X − 10 p − 10   p − 10 
0.12= P( X ≤ p)= P  ≤ = P  Z ≤ .
 2 2   2 
From the tables, P ( Z ≤ −1.175) =0.12. Therefore,
p − 10
=−1.175; p − 10 = −2.35; p =7.65.
2

Page 46 of 175
 165. Solution: D

From the normal table, the 14th percentile is associated with a z-score of −1.08 . Since the
means are equal and the standard deviation of company B's profit is 2.25 = 1.5 times the
standard deviation of company A's profit, a profit that is 1.08 standard deviations below the
mean for company A would be1.08/1.5 = 0.72 standard deviations below the mean for company
B. From the normal table, a z-score of −0.72 is associated with the 23.6th percentile.

166. Solution: C

The conditional variance is

Var ( X | X ≥=
10) E ( X 2 | X ≥ 10) − E ( X | X ≥ 10) 2
2
∞
∞ 
∫ ∫
2 −0.2( x −5) −0.2( x −5)
x (0.2) e dx  x (0.2) e dx 
10 
− ∞10  .
∞
 
∫10 0.2e  ∫ 0.2e
−0.2( x −5) −0.2( x −5)
dx dx 
 10 
Performing integration (using integration by parts) produces the answer of 25.

An alternative solution is to first determine the density function for the conditional distribution.
It is
0.2e −0.2( y −5) 0.2e −0.2( y −5) 0.2e −0.2( y −5)
=f ( y) ∞ = = ∞
= −0.2(5)
0.2e −0.2( y −10) , y > 10 .
−0.2( x −5)
dx −e
e
∫ 0.2e
−0.2( x −5)
10
10
Then note that Y – 10 has an exponential distraction with mean 5. Subtracting a constant does not
change the variance, so the variance of Y is also 25.

167. Solution: C

Let X and Y represent the annual profits for companies A and B, respectively and m represent the
common mean and s the standard deviation of Y. Let Z represent the standard normal random
variable.

Then because X’s standard deviation is one-half its mean,

 X −m 0−m
P( X <=0) P  < =  P( Z < −= 2) 0.0228.
 0.5m 0.5m 

Therefore company B’s probability of a loss is 0.9(0.0228) = 0.02052. Then,

Y −m 0−m
= P(Y <=
0.02052 0) P  < =  P( Z < −m / s ) . From the tables, –2.04 = –m/s and
 s s 
therefore s = m/2.04. The ratio of the standard deviations is (m/2.04)/(0.5m) = 0.98.

Page 47 of 175
 168. Solution: B

Y is a normal random variable with mean 1.04(100) + 5 = 109 and standard deviation 1.04(25) =
26. The average of 25 observations has mean 109 and standard deviation 26/5 = 5.2. The
requested probability is
 100 − 109 110 − 109 
P(100 < sample mean < 110) = P =−1.73 < Z < =0.19 
 5.2 5.2 
= 0.5753 − (1 − 0.9582)
= 0.5335.

169. Solution: E

The possible events are (0,0), (0,1), (0,2), (0,3), (1,1), (1,2), (1,3), (2,2), (2,3), and (3,3). The
probabilities (without c) sum to 0 + 2 + 4 + 6 + 3 + 5 + 7 + 6 + 8 + 9 = 50. Therefor c = 1/50.
The number of tornadoes with fewer than 50 million in losses is Y – X. The expected value is
(1/50)[0(0) + 1(2) + 2(4) + 3(6) + 0(3) + 1(5) + 2(7) + 0(6) + 1(8) + 0(9)]=55/50 = 1.1.

170. Solution: D

Consider three cases, one for each result of the first interview.
Independent (prob 0.5): Expected absolute difference is (4/9)(0) +(5/9)(1) = 5/9
Republican (prob =0.3): Expected absolute difference is (2/9)(0) + (5/9)(1) + (2/9)(2) = 1
Democrat (prob = 0.2): Expected absolute difference is (3/9)(0) + (5/9)(1) + (1/9)(2) = 7/9.
The unconditional expectation is 0.5(5/9) + 0.3(1) + 0.2(7/9) = 6.6/9 = 11/15.

Alternatively, the six possible outcomes can be listed along with their probabilities and absolute
differences.

171. Solution: C

Let Z = XY. Let a, b, and c be the probabilities that Z takes on the values 0, 1, and 2, respectively.
We have b = p(1,1) and c = p(1,,2) and thus 3b = c. And because the probabilities sum to 1,
a = 1 – b – c = 1 – 4b. Then, E(Z) = b + 2c = 7b, E(Z*Z) = b + 4c = 13b. Then,
Var ( Z=) 13b − 49b 2
(d / db)Var ( Z ) = 13 − 98b = 0 ⇒ b = 13 / 98.
The probability that either X or Y is zero is the same as the probability that Z is 0 which is
a = 1 – 4b = 46/98 = 23/49.

Page 48 of 175
172. Solution: C

Let J and K be the random variables for the number of severe storms in each city.
P=( K 5=
| J j ) P=( J j)
P( J= j | K= 5)=
P( K = 5)
5
P( K= 5 | J= 3)= 1/ 6, P( J= 3)=   0.630.4=
2
0.3456
 3
5
P( K= 5 | J= 4)
= 1/ 3, P( J= 4)=   0.64 0.4=
1
0.2592
 
4
5
P( K= 5 | J= 5)= 1/ 2, P( J= 5)=   0.650.4=
0
0.07776
5
P( K= 5)= (1/ 6)(0.3456) + (1/ 3)(0.2592) + (1/ 2)(0.07776) =0.18288
(1/ 6)(0.3456)
P( J= 3 | K= 5)= = 0.31496
0.18288
(1/ 3)(0.2592)
P( J= 4 | K= 5)= = 0.47244
0.18288
(1/ 2)(0.07776)
P ( J= 5 | K= 5)= = 0.21260
0.18288
E(J | K = 5) =
3(0.31496) + 4(0.47244) + 5(0.21260) = 3.89764.

173. Solution: B

Given N + S = 2, there are 3 possibilities (N,S) = (2,0), (1,1), (0,2) with probabilities 0.12, 0.18,
and 0.10 respectively.
The associated conditional probabilities are

P(N = 0 | N + S = 2) = 0.10/0.40 = 0.25,

P(N = 1 | N + S = 2) = 0.18/0.40 = 0.45,
P(N = 2 | N + S = 2) = 0.12/0.40 = 0.30.

The mean is 0.25(0) + 0.45(1) + 0.30(2) = 1.05.

The second moment is 0.25(0) + 0.45(1) + 0.30(4) = 1.65.
The variance is 1.65 – (1.05)(1.05) = 0.5475.

Page 49 of 175
174. Solution: A

Because the territories are evenly distributed, the probabilities can be averaged. Thus the
probability of a 100 claim is 0.80, of a 500 claim is 0.13, and of a 1000 claim as 0.07. The mean
is 0.80(100) + 0.13(500) + 0.07(1000) = 215. The second moment is 0.80(10,000) +
0.13(250,000) + 0.07(1,000,000) = 110,500. The variance is 110,500 – (215)(215) = 64,275.
The standard deviation is 253.53.

175. Solution: D

With each load of coal having mean 1.5 and standard deviation 0.25, twenty loads have a mean
of 20(1.5) = 30 and a variance of 20(0.0625) = 1.25. The total amount removed is normal with
mean 4(7.25) = 29 and a variance of 4(0.25) = 1. The difference is normal with mean 30 – 29 =
1 and standard deviation sqrt(1.25 + 1) = 1.5. If D is that difference,
 0 −1 
P( D > 0) = PZ > = −0.67  =0.7486.
 1.5 

176. Solution: C

The probability needs to be calculated for each total number of claims.

0: 0.5(0.2) = 0.10
1: 0.5(0.3) + 0.3(0.2) = 0.21
2: 0.5(0.4) + 0.3(0.3) + 0.2(0.2) = 0.33
3: 0.5(0.1) + 0.3(0.4) + 0.2(0.3) + 0.0(0.2) = 0.23
At this point there is only 0.13 probability remaining, so the mode must be at 2.

177. Solution: B

Let X represent the number of policyholders who undergo radiation.

Let Y represent the number of policyholders who undergo chemotherapy.
X and Y are independent and binomially distributed with 15 trials each and with "success"
probabilities 0.9 and 0.4, respectively.

The variances are 15(0.9)(0.1) = 1.35 and 15(0.4)(0.6) = 3.6.

The total paid is 2X + 3Y and so the variance is 4(1.35) + 9(3.6) = 37.8.

Page 50 of 175
 178. Solution: C

Let X and Y represent the number of selected patients with early stage and advanced stage
cancer, respectively. We need to calculate E (Y | X ≥ 1) .

From conditioning on whether or not X ≥ 1 , we have

E (Y ) =P[ X =0]E (Y | X =
0) + P[ X ≥ 1]E (Y | X ≥ 1) .

Observe that P[ X == 0] (1 − 0.2)6 = (0.8)6 , P[ X ≥ 1] =1 − P[ X =0] =1 − (0.8)6 , and

= = 0.6 . Also, note that if none of the 6 selected patients have early stage cancer,
E (Y ) 6(0.1)
then each of the 6 selected patients would independently have conditional probability
0.1 1
= of having late stage cancer, so E (Y | X= 0)= 6(1/ 8)= 0.75 .
1 − 0.2 8

Therefore,

E (Y ) − P[ X= 0]E (Y | X= 0) 0.6 − (0.8)6 (0.75)

=
E (Y | X ≥ 1) = = 0.547 .
P[ X ≥ 1] 1 − (0.8)6

179. Solution: A

Because there must be two smaller values and one larger value than X, X cannot be 1, 2, or 12. If
X is 3, there is one choice for the two smallest of the four integers and nine choices for the
largest integer. If X is 4, there are three choices for the two smallest of the four integers and
eight choices for the largest integer. In general, if X = x, there are (x – 1) choose (2) choices for
the two smallest integers and 12 – x choices for the largest integer. The total number of ways of
choosing 4 integers from 12 integers is 12 choose 4 which is 12!/(4!8!) = 495. So the probability
that X = x is:

 x − 1
  (12 − x)
 2  ( x − 1)( x − 2)(12 − x)
= .
495 990

Page 51 of 175
180. Solution: A

We have
P( X < k ) − P( X ≤ 10, 000)
0.95 = P ( X < k | X > 10, 000) =
1 − P(X ≤ 10, 000)
0.95[1 − P( X ≤ 10, 000)]= 0.9582 − P( X ≤ 10, 000)
0.9582 − 0.95
P( X ≤ 10, 000)
= = 0.164
1 − 0.95
 10, 000 − 12, 000 
0.164 = Φ  .
 c 
The z-value that corresponds to 0.164 is between –0.98 and –0.97. Interpolating leads to
z = –0.978. Then,
 10, 000 − 12, 000  −2, 000
0.164 = Φ   ⇒ −0.978 = ⇒ c = 2045.
 c  c

181. Solution: B

Before applying the deductible, the median is 500 and the 20th percentile is 200. After applying
the deductible, the median payment is 500 – 250 = 250 and the 20th percentile is max(0, 200 –
250) = 0. The difference is 250.

182. Solution: B

32 own L/A/H
55 own L/H so 55 – 32 = 23 own L/H/notA
96 own A/H so 96 – 32 = 64 own A/H/notL
207 own H so 207 – 32 – 23 – 64 = 88 own H only
L only = X, A only = X + 76
88 + X + (X + 76) = 270 so X = 53 so L only = 53, A only = 129
129 + 64 + 32 + L/A/notH = 243 so L/A/notH = 18
Total clients = 53 + 129 + 88 + 18 + 64 + 23 + 32 = 407

Alternatively, a Venn diagram could be used to guide the calculations.

Page 52 of 175
183. Solution: D

Then 290 = 45 + 45 + x + x, thus x = 100.

Also 228 = 100 + y + 16 + 77, thus y = 35.
Total clients = 145 + 82 + 16 + 35 + 100 + 77 + 45 = 500.

184. Solution: D

Let A, B, and C be the sets of policies in the portfolio on three-bedroom homes, one-story homes,
and two-bath homes, respectively. We are asked to calculate 1000 − n( A ∪ B ∪ C ) , where n(D)
denotes the number of elements of the set D. Then,
n( A ∪ B ∪ C ) = n( A) + n( B ) + n(C ) − n( A ∩ B ) − n( A ∩ C ) − n( B ∩ C ) + n( A ∩ B ∩ C )
= 130 + 280 + 150 − 40 − 30 − 50 + 10 = 450.
The answer is 1000 – 450 = 550.

185. Solution: B

We seek the number of ways to select 4 individuals from 7 and choose one selected member as
subcommittee chair. (The existence of a subcommittee secretary is irrelevant.) There are (7
choose 4) = 7(6)(5)(3)/4! = 35 ways to form a collection of 4 individuals from 7. For each of
them, there are 4 ways to assign a chair. The product, 140, is the number of different ways to
form a subcommittee of 4 individuals and assign a chair and thus is the maximum number
without repetition.

Page 53 of 175
186. Solution: D

P (2 red and 2 blue transferred and blue drawn)

P (2 red and 2 blue transferred | blue drawn) =
P (blue drawn)
 8  6 
  
=    ×=
2 2 2 28(15) 2 840
P (2 red and 2 blue transferred and blue drawn) ×=
14  4 1001 4 4004
 
4
 8  6   8  6   8  6   8  6 
           
3 1 1 60 + 480 + 840 + 336 1716
=    × +    × +    × +   =
0 4 4 1 3 3 2 2 2
P (blue drawn) × =
14  4 14  4 14  4 14  4 4004 4004
       
4 4 4 4
840
P (2 red and 2 blue transferred | blue drawn) = = 0.49.
1716

187. Solution: D

If a policy is of Type A, the probability that the two claims are equal is (0.4)(0.4) + (0.3)(0.3) +
(0.2)(0.2) + (0.1)(0.1) = 0.16 + 0.09 + 0.04 + 0.01 = 0.30.
If a policy is of Type B, the probability that the two claims are equal is 4(0.25)(0.25) = 0.25.
Therefore, the probability that a randomly selected policy has equal claims is 0.70(0.30) +
0.30(0.25) = 0.285.
If four policies are selected, the desired probability is the probability that a binomial random
variable with n = 4 and p = 0.285 is 1. This is 4(0.285)(1 – 0.285)^3 = 0.417.

Page 54 of 175
188. Solution: A

Let A = event that person wants life policy P

B = event that person wants life policy Q
C = event that person wants the health policy
and let a, b, c, d be the probabilities of the regions as shown.

i) is reflected by no intersection of A and B

iv) is reflected by the 0.18 in the diagram
ii) implies a + b = 2(c + d)
iii) implies b + c + 0.18 = 0.45 or b + c = 0.27
v) implies P([A or B] and C) = P(A or B)P(C) or b + c = (a + b + c + d)(0.45)

So 0.27 = (a + d + 0.27)(0.45) and then a + d = 0.33.

The desired probability is a + 0.18 + d = 0.33 + 0.18 = 0.51.

189. Solution: B

The state will receive 800,000($1) = $800,000 in revenue, and will lose money if there are 2 or
more winning tickets sold. The player’s entry can be viewed as fixed. The probability the
lottery randomly selects those same six numbers is from a hypergeometric distribution and is
 6  24 
  
 6= 0  = 1(1) 6(5)(4)(3)(2)(1)
=
1
.
 30  30! 30(29)(28)(27)(26)(25) 593,775
  6!(24!)
6
The number of winners has a binomial distribution with n = 800,000 and p = 1/593,775. The
desired probability is
Pr(2 or more winners) =
1 − Pr(0 winners) − Pr(1 winner)
0 800,000 1 799,999
 800,000   1   593,774   800,000   1   593,774 
=
1−      −    
 0   593,775   593,775   1   593,775   593,775 
=
1 − 0.2599 − 0.3502 =
0.39.

Page 55 of 175
190. Solution: E

The number that have errors is a binomial random variable with p = 0.03 and n = 100. Let X be
the number that have errors. Then,
Pr(number that are error-free ≤ 95) =Pr( X ≥ 5) =1 − P(0) − P(1) − P (2) − P (3) − P (4)
 100  100  100  100 
=
1−   ( 0.03) ( 0.97 ) −  1  ( 0.03) ( 0.97 ) −  2  ( 0.03) ( 0.97 ) −  3  ( 0.03) ( 0.97 )
0 100 1 99 2 98 3 97

 0       
100 
−  ( 0.03) ( 0.97 ) =
4 96
0.1821.
 4 
Or, the Poisson approximation can be used. Then, λ = 3 and
e −3 30 e −3 31 e −3 32 e −3 33 e −3 34  9 27 81 
P ( X ≥ 5) =
1− − − − − 1 − e −3 1 + 3 + + +  =
= 0.1847.
0! 1! 2! 3! 4!  2 6 24 

191. Solution: D

P[ A ∪ B ∪ C ] = P[ A] + P[ B] + P[C ] − P[ A ∩ B] − P[ A ∩ C ] − P[ B ∩ C ] + P[ A ∩ B ∩ C ]
= 0.2 + 0.1 + 0.3 − 0.2(0.1) − 0 − 0.1(0.3) + 0= 0.55.

192. Solution: A

The probability a union of three events equals the sum of their probabilities if and only if they
are mutually exclusive, that is, no two of them can both occur.

Events A and B cannot both occur since no thefts in the first three years would imply no thefts in
the second year, thus precluding the possibility of at least 1 theft in the second year.
Events A and E cannot both occur since no thefts in the first three years would imply no thefts in
the third year, thus precluding the possibility of at least 1 theft in the third year.
Events B and E cannot both occur since it is impossible to experience both no thefts and at least
1 theft in the second year.
Thus, events A, B, and E satisfy the desired condition.

193. Solution: D

Consider the two mutually exclusive events “first envelope correct” and “first envelope
incorrect.” The probability of the first event is 1/4 and meets the requirement of at least one
correct. For the 3/4 of the time the first envelope is incorrect, there are now 3 more envelopes to
fill. Of the six permutations, three will place one letter correctly. The total probability is 1/4 +
3/4(3/6) = 5/8.

194. Solution: C

The deductible is exceeded for 4, 5 or 6 office visits. Therefore, the requested probability is
0.02/(0.04 + 0.02 + 0.01) = 0.286.

Page 56 of 175
 195. Solution: C

Let A be the event that part A is working after one year and B be the event that part B is working
after one year. Then,
P( A and B) P( A) + P ( B ) − P ( A or B ) 0.8 + 0.6 − 0.9
=
P( B | A) = = = 5 / 8.
P( A) P( A) 0.8

196. Solution: D

 2 47
   
1   2   3  = 0.245.
13 
 
6 

197. Solution: E

The maximum number of draws needed is 5. This can only happen if the first four draws produce
four different colors. The first draw can be any sock. The second draw must be one of the 6 (of 7
remaining) that are different. The third draw must be one of the 4 (of 6) that are different from
the first two. The fourth draw must be one of the 2 (of 5) that are different. The probability all
of this happens is 1(6/7)(4/6)(2/5) = 0.2286.

198. Solution: E

Define the events as follows:

A = applies for a mortgage
S = initially spoke to an attendant
R = call returned the same day
N = call returned the next day
Then, using Bayes’ Theorem,
P( A | S ) P( S )
P ( S | A) =
P( A | S ) P( S ) + P( A | R) P( R) + P( A | N ) P( N )
0.8(0.6)
= 0.69.
0.8(0.6) + 0.6(0.4)(0.75) + 0.4(0.4)(0.25)

Page 57 of 175
199. Solution: A

Define the events as follows:

C = files a claim
N = no lifting
M = moderate lifting
H = heavy lifting
Then, using Bayes’ Theorem,
P(C | N ) P( N )
P( M or H | C ) =1 − P( N | C ) =
1−
P(C | N ) P( N ) + P(C | M) P(M) + P(C | H) P(H)
0.05(0.4)
=1− =1 − 0.25 = 0.75.
0.05(0.4) + 0.08(0.5) + 0.2(0.1)

200. Solution: E

From the Law of Total Probability, the required probability is

∑ k =0 P(0 accidents with an uninsured driver | k accidents)P(k accidents)
∞

−5 k
k e 5 e −5 ∞ e
−3.75
(3.75) k
∑ ∑
∞ −1.25
= k
(0.75)
0=
= −3.75 k 0
= e= 0.287.
k! e k!

201. Solution: B

From the binomial distribution formula, the probability P that a given patient tests positive for at
3− 23 3− 3  3
least 2 of these 3 risk factors is P=   p (1 − p ) +   p (1 − p ) = 3 p (1 − p ) + p .
2 3 2 3

 2  3
Using the geometric distribution formula with probability of success P= 3 p 2 (1 − p ) + p 3 , the
probability that exactly n patients are tested is

n −1
(1 − P) n −1 P = 1 − 3 p 2 (1 − p ) − p 3  3 p 2 (1 − p ) + p 3  .

202. Solution: B

For there to be more than three calls before one completed survey all that is required is the first
three calls not result in a completed survey. This probability is (1 − 0.25)3 =
0.42.

Page 58 of 175
203. Solution: B

For a given x, there are x – 1 choices for the smaller of the four integers and 12 – x choices for
12 − x  ( x − 1)(12 − x)(11 − x)
the two larger integers. Thus, there are ( x − 1)  = triples that satisfy
 2  2
12 
the event. The total number of possible draws is   = 495 and the probability is
4
( x − 1)(12 − x)(11 − x) 1 x − 1)(12 − x)(11 − x)
= .
2 495 990

204. Solution: D

The cumulative distribution function for the exponential distribution is

1 − e−λ x =
F ( x) = 1 − e− x / µ =
1 − e − x /100 , x > 0 .

From the given probability data,

F (50) − F (40) =F (r ) − F (60)

( ) (
1 − e −50/100 − 1 − e −40/100 =1 − e − r /100 − 1 − e −60/100 )
e −40/100 − e −50/100 = e −60/100 − e − r /100 .
− r /100 −60/100 −40/100 −50/100
e =e −e +e = 0.4850
−r /100 = ln(0.4850) =
−0.7236
r = 72.36.

205. Solution: B

The desired event is equivalent to the time of the next accident being between 365 and 730 days
from now. The probability is
F (730) − F (365) =1 − e −730/200 − (1 − e −365/200 ) =e −1.825 − e −3.65 =0.1352.
Note that the problem provides no information about the distribution of the time to subsequent
accidents, but that information is not needed. With nothing given, anything can be assumed. If
the time to subsequent accidents has the same exponential distribution and the times are
independent, then the number of accidents in each 365 day period is Poisson with mean 1.825.
Then the required probability is e −1.825 (1 − e −1.825 ) =
0.1352.

Page 59 of 175
 206. Solution: C

Pr( Z ≤ 0.72) = 0.7642 = Pr( X ≤ 2000) = Pr[ Z ≤ (2000 − µ ) / σ ]

0.72 (2000 − µ ) / σ
=
Pr( Z ≤ 1.32) = 0.9066 = Pr( X ≤ 3000) = Pr[ Z ≤ (3000 − µ ) / σ ]
1.32 (3000 − µ ) / σ
=
(3000 − µ ) / (2000 − µ )
1.32 / 0.72 =
1.8333(2000 − µ )= 3000 − µ
µ =[1.8333(2000) − 3000] / (1.8333 − 1) = 800
σ= (3000 − µ ) /1.32 =
1666.67
Pr( X ≤ 1000) = Pr[ Z ≤ (1000 − 800) /1666.67] = Pr( Z ≤ 0.12) = 0.5478.

207. Solution: B

 1 −V −V 
P( X > V ) =−
1 P( X ≤ V ) =−
1 F (V ) =−
1 1 − e V =0.10.
 10 

208. Solution: E

The given mean of 5 years corresponds to the pdf f (t ) = 0.2e −0.2t and the cumulative distribution
function F (t ) = 1 − e −0.2t . The conditional pdf is
f (t ) 0.2e −0.2t
g=
(t ) = , 0 < t < 10 .
F (10) 1 − e−2
The conditional mean is (using integration by parts)
−0.2 t
10 10 0.2e 10
E (T | T <=10) ∫ tg = (t )dt ∫ t −
= dt 0.2313∫ te −0.2t dt
0 0 1− e 2 0

= 0.2313 t (−5e −0.2t ) − ∫ −5e −0.2t=)dt  0.2323  −6.7668 + 0 − 25e −0.2t 

10 10 10

 0 0   0 
= 0.2313[−6.7668 − 3.3834 + 25] = 3.435.

209. Solution: D

x
∫ 2e dy =
−2 y x
F ( x) = −e −2 y =
1 − e −2 x
0 0

P[ X ≤ 0.5] F (0.5) 1 − e −1
P[ X ≤ 0.5 | X ≤ 1.0]= = = = 0.731.
P[ X ≤ 1.0] F (1.0) 1 − e −2

Page 60 of 175
210. Solution: B

If E and F are independent, so are E and the complement of F. Then,

P(exactly one) = P( E ∩ F c ) + P( E c ∩ F ) = 0.84(0.35) + 0.16(0.65) = 0.398.

211. Solution: E

Let M and N be the random variables for the number of claims in the first and second month.
Then
P[ M + N ≤ 3, M < 2]
P[ M + N > 3 | M < 2] =1 − P[ M + N ≤ 3 | M < 2] =1 −
P[ M < 2]
P[ M = 0, N =+0] P[ M = 1, N =+
0] P[ M = 0, N =1] + P[ M = 1, N =
1]
+ P[ M = 0, N =+ 2] P[ M = 1, N =+ 2] P[ M = 0, N = 3]
= 1−
P[ M =+ 0] P[ M = 1]
(2 / 3)(2 / 3) + (2 / 9)(2 / 3) + (2 / 3)(2 / 9) + (2 / 9)(2 / 9) + (2 / 3)(2 / 27) + (2 / 9)(2 / 27) + (2 / 3)(2 / 81)
= 1−
2 / 3+ 2 / 9
0.87243
=1− = 0.0185.
0.88889

212. Solution: C

Let X = number of patients tested, which is geometrically distributed with constant “success”
probability, say p.

P[ X ≥ n] = P[first n − 1 patients do not have apnea] =(1 − p ) n −1.

Therefore,

r = P[ X ≥ 4] =(1 − p )3
P[ X ≥ 12] (1 − p )11 8 8
P[ X ≥ 12 | X ≥ 4] = = = (1 − p ) 8
= 
 (1 − p ) 
3 3
 = r 3
P[ X ≥ 4] (1 − p )3

213. Solution: D

The number of defects has a binomial distribution with n = 100 and p = 0.02.
100  2 98
  (0.02) (0.98)
P[ X = 2]  2 
P[ X= 2 | X ≤ 2]= =
P[ X ≤ 2]  100   100  100 
 (0.02) (0.98) +   (0.02) (0.98) + 
0 100 1 99 2 98
  (0.02) (0.98)
 0   1   2 
0.27341
= 0.404.
0.13262 + 0.27065 + 0.27341

Page 61 of 175
 214. Solution: A

The town experiences one tornado every 0.8 years on average, which is the mean of the
exponential distribution. The median is found from

0.5 = 1 e − m /0.8
P[ X ≤ m] =−
ln(0.5) = −m / 0.8
m= −0.8ln(0.5) = 0.55.

215. Solution: A

Let X = the amount of a loss. Ignoring the deductible, the median loss is the solution to
∞

∫ 0.25e
−0.25 x
0.5 = P[ X > m] = dx = 0 − (−e −0.25 m ) = e −0.25 m which is m = –4(ln0.5) = 2.77.
m

Because 2.77 > 1, the loss exceeds 2.77 if and only if the claim payment exceeds
2.77 – 1 = 1.77, which is therefore the median claim payment.

216. Solution: B

The payment random variable is 1000(X – 2) if positive, where X has a Poisson distribution with
mean 1. The expected value is
e −1  ∞ e −1 e −1 
∑x 3  ∑ x 0= ∑x 0
∞ 2
1000
=
( x −=2)=
1000 ( x − 2) − ( x − 2) 
x!  x! x! 
= 1000 (1 − 2 − [−2e −1 − e −=
1
]) 1000(−1 + 3e=
−1
) 104.
Note the first sum splits into the expected value of X, which is 1, and 2 times the sum of the
probabilities (also 1).

217. Solution: C

Let X be the number of employees who die. The expected cost to the company is
100 P[Y = 1] + 200 P[Y =2] + 300 P[Y =
3] + 400 P[Y > 3]
= 100(2)e −2 + 200(2)e −2 + 300(4 / 3)e −2 + 400[1 − (1 + 2 + 2 + 4 / 3)e −2 ]
400 − 1533.33e −2 =
= 192.

Page 62 of 175
 218. Solution: B

Let X be the number of burglaries. Then,

∞ ∞

∑ xp( x) ∑ xp( x) − (0) p(0) − (1) p(1)

E (= =
X|X ≥ 2) = x
x 2= 0

1 − p (0) − p (1) 1 − p (0) − p (1)

1 − p (1) 1 − e −1
= = = 2.39.
1 − p(0) − p(1) 1 − e −1 − e −1

219. Solution: A

The expected unreimbursed loss is

d 1 450 1 d2 450 − d 1
∫0 x 450 dx + ∫d d 450 dx = 900 + d 450 = 900 (900d − d ) = 56
2

d 2 − 900d + 50, 400 = 0

900 ± 9002 − 201, 600 900 − 780
=d = = 60.
2 2

220. Solution: D

Let X represent the loss due to the accident.

From the given information, the probability that X is in[0, b] is 0.75, which is larger than 0.5. So
the median, 672, must lie in the interval [0, b].

Note that in a uniform distribution over an interval I, the probability of landing in an interval J is
the length of the intersection of J and I, divided by the length of I.
 672 − 0   0.75 
Therefore, we have 0.5 = P[X ≤ 672] = 0.75  =
 which gives b 672 =   1008 .
 b−0   0.5 

From the law of total probability applied to means, the mean loss due to the accident is
E( X ) P[minor acc.]E( X | minor acc.) + P[major acc.]E( X | major acc.)
0.75E( X | X is uniform on [0, b]) + 0.25E( X | X is uniform on [b,3b]) .
 0 + 1008   1008 + 3(1008) 
=
0.75   + 0.25  =882.
 2   2 

221. Solution: C

The claim amount distribution is a mixture distribution with 20% point mass at 0. To obtain the
median, the remaining 30% probability is from the case where there is a non-zero payment. This
corresponds to the 30/(1 – 0.2) = 37.5 percentile of the unconditional claim amount distribution.
The 37.5 percentile of the standard normal distribution is at z = –0.3187 and thus the median is
1000 – 0.3187(400) = 873.

Page 63 of 175
 222. Solution: B

First, the z-score associated with the deductible is:

15, 000 − 20, 000
z= = −1.11
4,500
Next, using the normal table, we find that the probability that a loss exceeds the deductible is:

P ( Z > −1.11) =0.8665.

The 95th percentile of losses that exceed the deductible is the 1 – 0.05(0.8665) = 0.9567 =
95.67th percentile of all losses.

The 95.67th percentile of all losses is between 1.71 and 1.72 standard deviations above the mean.
To the nearest hundred, both of these correspond to a loss amount of 27,700.

223. Solution: C

The z-score corresponding to the 98th percentile is 2.054. The answer is 20 + 2.054(2) = 24.108.

224. Solution: C

Let T be the time of registration. Due to symmetry of the density function about 6.5. The
constant of proportionality, c, can be solved from
6.5
0.5 = ∫ c t +11 dt = c ln(t + 1) 0 = c ln(7.5) , which gives c = 0.5/ln(7.5).
6.5
0
Again using the symmetry, if 60th percentile of T is at k, then P[T ≤ 13 − k ] =
0.4. Thus,
13− k 0.5 1 0.5
0.4= P[T ≤ 13 − k ]= ∫ dt= ln(14 − k )
0 ln(7.5) t + 1 ln(7.5)
=
ln(14 − k ) 0.8ln(7.5)
= 1.6119
14 −= = 5.0124
k e1.6119
k = 8.99.

225. Solution: E

The distribution function of L is F ( x) = 1 − e − λ x and its variance is 1 / λ 2 . We are given

F(2) = 1.9F(1) and therefore,
1 − e −2 λ = 1.9(1 − e − λ )
(1 − e − λ )(1 + e − λ ) = 1.9(1 − e − λ )
e − λ = 0.9
λ= − ln(0.9) =
0.10536
=
Var ( L) 1/=
0.105362 90.1.

Page 64 of 175
 226. Solution: D

We have Y = 0 when X < d and Y = X – d otherwise. Then, noting that the second moment of an
exponential random variable is twice the square of the mean,
d ∞ ∞
∫ 0(0.1e )dx + ∫ ( x − d )(0.1e )dx = 0 + ∫ x(0.1e −0.1( x + d ) )dx =
−0.1 x −0.1 x
E (Y ) = e −0.1d (10)
o d 0
d ∞ ∞
∫ 0 (0.1e )dx + ∫ ( x − d ) (0.1e )dx = 0 + ∫ x 2 (0.1e −0.1( x + d ) )dx =
−0.1 x −0.1 x
E (Y 2 ) = 2 2
e −0.1d (200)
o d 0
−0.1d −0.1d −0.1d −0.2 d
Var(Y) =e (200) − [e (10)] =100[2e
2
−e ],

227. Solution: C

For the Poisson distribution the variance is equal to the mean and hence the second moment is
the mean plus the square of the mean. Then,
E[ X ] =0.1(1) + 0.5(2) + 0.4(10) =5.1
E[ X 2 ]= 0.1(1 + 12 ) + 0.5(2 + 22 ) + 0.4(10 + 102 )= 47.2
Var ( X ) = 47.2 − 5.12 = 21.19.

228. Solution: C

Let X be the number of tornadoes and Y be the conditional distribution of X given that X is at
least one. There are (at least) two ways to solve this problem. The first way is to begin with the
probability function for Y and observe that starting the sums at zero adds nothing because that
term is zero. Then note that the sums are the first and second moments of a regular Poisson
distribution.
P[ X = y ] 3 y e −3 / y !
p ( y ) = P[Y = y ] = P[ X = y | X > 0] = = , y = 1, 2,
P[ X > 0] 1 − e −3
1 3 y e −3 1 3 y e −3 3
−3 ∑ y 1 = −3 ∑ y 0
∞ ∞
=E (Y ) = y = y
=
1− e y! 1− e y! 1 − e −3
y −3 y −3
1 2 3 e 1 2 3 e 3 + 32
∑ ∑
∞ ∞
=E (Y 2
) = y = y
=
1 − e −3 y 1 = y! 1 − e −3 y 0 y! 1 − e −3
2
12  3 
Var (Y ) = −3 −  −3 
=
2.6609.
1− e  1− e 

Page 65 of 175
The second way is to use formulas about conditional expectation based on the law of total
probability.
E( X ) =E( X | X =0) P[ X = 0] + E ( X | X > 0) P[ X > 0]
3= 0(e −3 ) + E ( X | X > 0)(1 − e −3 )
3
E( X | X > = 0) = 3.1572
1 − e −3
E( X 2 ) = E( X 2 | X = 0) P[ X =0] + E ( X 2 | X > 0) P[ X > 0]
3 + 3=
2
0(e −3 ) + E ( X 2 | X > 0)(1 − e −3 )
12
E( X 2 | X > = 0) = 12.6287
1 − e −3
Var ( X ) = 12.6287 − 3.15722 = 2.6608.

229. Solution: C

Let X represent individual expense. Then,

0, 200 ≤ X ≤ 400

Y =  X − 400, 400 < X ≤ 900 and the density function of X=
is f ( x) 0.001, 200 ≤ x ≤ 1200.
500, 900 < X ≤ 1200


400 900 1200

=
E (Y ) ∫200
0(0.001)dx + ∫
400
(x − 400)(0.001)dx + ∫
900
500(0.001)dx
900
( x − 400) 2
=+
0 0.001 + 500(0.001)(1200 − 900) =+
0 125 + 150 =275
2 400
400 900 1200
=
E (Y 2 ) ∫200
02 (0.001)dx + ∫
400
(x − 400) 2 (0.001)dx + ∫
900
5002 (0.001)dx
900
( x − 400)3
= 0 + 0.001 + 5002 (0.001)(1200 − 900) =
0 + 41, 666.67 + 75, 000 =
116, 666.67
3 400

Var=
(Y ) 116, 666.67 − 275
= 41, 041.67. 2

Page 66 of 175
 230. Solution: D

Let X represent the loss.

The variance for a uniform distribution is the square of the interval length, divided by 12. Thus,
b2
Var ( X ) = .
12
Let C represent the claim payment from the loss. Then C = 0 for X < b/2 and C = X – b/2,
otherwise. Then,
b /2 b
E (C ) =∫ 0(1/ b)dx + ∫ ( x − b / 2)(1/ b)dx =0 + ( x − b / 2) 2 / (2b)
b
=(b / 2) 2 / (2b) =b / 8
0 b /2 b /2
b /2 b
E (C 2 ) =∫ 02 (1/ b)dx + ∫ ( x − b / 2) 2 (1/ b)dx =0 + ( x − b / 2)3 / (3b)
b
=(b / 2)3 / (3b) =b 2 / 24
0 b /2 b /2

Var (C ) = b 2 / 24 − (b / 8) 2 = 5b 2 /192.
The ratio is [5b 2 /192] / [b= 2
/12] 60 = /192 5 /16.

231. Solution: A
Let X be the profit random variable. Then, 0.05 0) P( Z < − µ / σ ) and from the table,
= P( X <=
−µ / σ = −1.645. From the problem, σ = µ . Therefore, −1.645 =
2 3
− µ / µ 3/2 =
− µ −1/2 and
=µ 1/1.645
= 2
0.37. in billions, or 370 million.

232. Solution: A

E[( X − 1)
= 2
] E[ X 2 ] − 2 E[ X ]=
+ 1 47 so E[ X ]= (61 + 1 − 47) / 2= 7.5 . The standard deviation is
E[ X 2 ] − E[ X ]2 = 61 − 7.52 = 2.18.

Page 67 of 175
233. Solution: D

Let D be the number of diamonds selected and S be the number of spades. First obtain the
hypergeometric probability S = 0:
 3 7
  
=   =
0 2  1(21) 7
P ( S= 0) = .
10  45 15
 
2
The required probability distribution is:
 2 3 5
   
P(=
D 0,= S 0) 1  0   0   2  15 1(1)(10) 10
P ( D= 0 | S= 0)= = = =
P ( S = 0) 7 /15 10  7 45 21
 
2
 2 35
   
P(=
D 1,= S 0) 1  1   0   1  15 2(1)(5) 10
P( D= 1| S= 0)
= = = =
P( S = 0) 7 /15 10  7 45 21
 
2
 2 3 5
   
P=( D 2,= S 0) 1  2   0   0  15 1(1)(1) 1
P ( D= 2 | S= 0)
= = = = .
P ( S = 0) 7 / 15 10  7 45 21
 
2
Then,
E(D | S = 0) =
0(10 / 21) + 1(10 / 21) + 2(1/ 21) = 12 / 21 = 4/7
E(D2 | S =
0) =
02 (10 / 21) + 12 (10 / 21) + 22 (1/ 21) =
14 / 21 =
2/3
Var ( D | S =
0) =
2 / 3 − (4 / 7) 2 =
50 /147 =
0.34.

234. – 236. DELETED

237. Solution: A

To be delayed over three minutes, either the car or the bus must arrive between 7:20 and 7:22.
The probability for each is 2/15. The probability they both arrive in that interval is (2/15)(2/15).
Thus, the probability of at least one being delayed is 2/15 + 2/15 – (2/15)(2/15) = 56/225 = 0.25.

Page 68 of 175
 238. Solution: C

The probability that a skateboarder makes no more than two attempts is the probability of being
injured on the first or second attempt, which is p + (1 − p ) p = 2 p − p 2 . Then,
= F (2,=
0.0441 2) (2 p − p 2 ) 2
= 2 p − p2
0.21
p 2 − 2 p + 1 =0.79
( p − 1) 2 =
0.79
p − 1 =±0.88882
p = 0.11118.
The probability that a skateboarder makes no more than one attempt is p while the probability of
making no more than five attempts is the complement of having no injuries on the first five
attempts. Hence,
F (1,5) = p[1 − (1 − p )5 ] = 0.0495.

239. Solution: B

P( X =
3, Y ==
3)) F (3,3) − F (2,3) − F (3, 2) + F (2, 2) =
0.9360 − 0.8736 − 0.9300 + 0.8680 =
0.0004

240. Solution: D

Let X denote the number of deaths next year, and S denote life insurance payments next year.
Then S = 50,000X, where X ~ Bin(1000, 0.014). Therefore,
=E ( S ) E= = 700, 000
(50, 000 X ) 50, 000(1000)(0.014)
= =
Var ( D) Var = 34,510, 000, 000
(50, 000 X ) 50, 0002 (1000)(0.014)(0.986)
StdDev( S ) = 185, 769.
The 99th percentile is 700,000+185,769(2.326)= 1,132,099, which rounds to 1,150,000.

241. Solution: E

Let X k be the random change in month k. Then E ( =

X k ) (0.5)(1.1) + 0.5(−0.9)
= 0.1 and
1 . Let S = ∑ k =1 X k . Then, E(S) = 100(0.1) = 10 and
100
Var ( X=
k) 0.5(1.1) 2 + 0.5(−0.9) 2 − (0.1)
= 2

Var(S) = 100(1) = 100. Finally,

 −9 − 10 
P(100 + S > 91) = P( S > −9)  P  Z > = −1.9  = 0.9713.
 100 

Page 69 of 175
 242. Solution: E

X has an exponential distribution with mean 8 and variance 64. The second moment is 128. The
mean and second moment of Z are both 0.45. Then (using the independence of X and Z),
=
E ( ZX ) E=( Z ) E ( X ) 0.45(8)
E=
[( ZX ) 2 ] E ( Z =
2
= 57.6
) E ( X 2 ) 0.45(128)
Var ( ZX ) = 57.6 − 3.62 = 44.64.

243. Solution: B

Each (x,y) pair has probability 1/25. There are only three possible benefit amounts:
0: Occurs only for the pair (0.0) and so the probability is 1/25.
50: Occurs for the three pairs (0,1), (1,0), and (1,1) and so the probability is 3/25.
100: Occurs in all remaining cases and so the probability is 21/25.
The expected value is 0(1/25) + 50(3/25) + 100(21/25) = 2250/25 = 90.

244. Solution: B

The marginal distribution for the probability of a given number of hospitalizations can be
calculated by adding the columns. Then p(0) = 0.915, p(1) = 0.072, p(2) = 0.012, and p(3) =
0.001. The expected value is 0.915(0) + 0.072(1) + 0.012(2) + 0.001(3) = 0.099.

245. Solution: E

Let S be the speed and X be the loss. Given S, X has an exponential distribution with mean 3X.
Then, noting that the variance of an exponential random variable is the square of the mean, the
variance of a uniform random variable is the square of the range divided by 12, and for any
random variable the second moment is the variance plus the square of the mean:
=
Var ( X ) Var[ E ( X | S )] + E[Var ( X | S )
= Var[3S ] + E (9 S 2 )
= 9(20 − 5) 2 /12 + 9[(20 − 5) 2 /12 + 12.52 ]
= 1743.75.

Page 70 of 175
246. Solution: C

The four possible outcomes for which X + Y = 3 are given below, with their probabilities.
2.33 e −2.3
(0,3) : e −1.7 = 2.0278e −4
3!
1.7e −1.7 2.32 e −2.3
(1, 2) : = 4.4965e −4
1! 2!
1.7 e 2.3 e −2.3
2 −1.7
(2,1) : = 3.3235e −4
2! 1!
3 −1.7
1.7 e
(3, 0) : e −2.3 = 0.8188e −4 .
3!
The conditional probabilities are found by dividing the above probabilities by their sum. They
are, 0.1901, 0.4215, 0.3116, 0.0768, respectively. These apply to the X – Y values of –3, –1, 1,
and 3. The mean is –3(0.1901) –1(0.4215) + 1(0.3116) + 3(0.0768) = –0.4498. The second
moment is 9(0.1901) + 1(0.4215) + 1(0.3116) + 9(0.0768) = 3.1352. The variance is 2.9329.

247. Solution: A

The marginal distribution of X has probability 1/5 + a at 0, 2a + b at 1, and 1/5 + b at 2. Due to

symmetry, the mean is 1 and so the variance is (0 − 1) 2 (1/ 5 + a ) + (1 − 0) 2 (1/ 5 + a )= 2 / 5 + 2a
which is minimized at a = 0. The marginal distribution of Y is the same as that of X and thus has
the same variance, 2/5 + 0 = 2/5.

248. Solution: C

Cov( X , Y ) =
E ( XY ) − E ( X ) E (Y ) =
E( X 3 ) − E( X )E( X 2 )
E (=
X ) E ( X=
3
) (1/ 3)(−1 + 0 +=
1) 0
=
E( X 2
) (1/ 3)(1 + 0=
+ 1) 2 / 3
Cov( X , Y ) =
0 − 0(2 / 3) =
0.
They are dependent, because
Pr( X= 0, Y= 0)= Pr( X= 0, X =2
0)= Pr( X= 0)= 1/ 3
Pr( X= 0) Pr(Y= 0)= (1/ 3)(1/ 3)= 1/ 9 ≠ 1/ 3.

249. Solution: B

Let X and Y be the two independent losses and Z = min(X,Y). Then,

Pr( Z > z=
) Pr( X > z and Y > z= ) e − z e −=
) Pr( X > z ) Pr(Y > z= z
e −2 z
FZ ( z ) =Pr( Z ≤ z ) =1 − Pr( Z > z ) =1 − e −2 z ,
which can be recognized as an exponential distribution with mean 1/2.

Page 71 of 175
250. Solution: B

Let X and Y be the miles driven by the two cars. The total cost, is then C = 3(X/15 + Y/30) =
0.2X + 0.1Y. C has a normal distribution with mean 0.2(25) + 0.1(25) = 7.5 and variance 0.04(9)
+ 0.01(9) = 0.45. Then, Pr(C < 7) = Pr( Z < (7 − 7.5) / 0.45 =−0.7454) = 0.23.

251. Solution: B

Let X denote the first estimate and Y the second. Then, Pr( X > 1.2Y ) = Pr( X − 1.2Y > 0). W = X
– 1.2Y has a normal distribution with mean 1(10b) – 1.2(10b) = –2b and variance
2.44b 2 . Then, Pr(W > 0)= Pr( Z > (0 + 2b) / 2.44b = 1.280)= 0.100.
12 b 2 + 1.22 b 2 =
2

252. Solution: C

Let µ be the common mean. Then the standard deviations of X and Y are 3µ and 4 µ
respectively. The mean and variance of (X + Y)/2 are then ( µ + µ ) / 2 =
µ and
25µ 2 / 4
[(3µ ) 2 + (4 µ ) 2 ] / 4 =
25µ 2 / 4 respectively. The coefficient of variation is = 5 / 2.
µ

253. Solution: D

Var(Z) = Var(3X + 2Y – 5) = 9Var(X) + 4Var(Y) = 9(3) + 4(4) = 43.

254. Solution: E

The mean is the weighted average of the three means: 0.1(20) + 0.3(15) + 0.6(10) = 12.5. The
second moment is the weighted average of the three second moments (each of which is the
square of the mean plus the mean, for a Poisson distribution): 0.1(420) + 0.3(240) + 0.6(110) =
180. The variance is the second moment minus the square of the mean, which is 23.75.

255. Solution: B

Let F be the number of fillings and R be the number of root canals. The total claim for a given
policyholder, C, in a year is C = 50F + 0.7(500R) = 50F + 350R.

We have E(F) = 0.6(0) + 0.2(1) + 0.15(2) + 0.05(3) = 0.65 and E(R) = 0.8(0) + 0.2(1) = 0.2.
Then, E(C) = 50(0.65) + 350(0.2) = 102.50.

Page 72 of 175
256. Solution: B

Due to the memoryless property of the exponential distribution, the distribution of the
reimbursement given that there is a payment is exponential with the same parameter. Thus
0.5 = F (6000) = 1 − e −6000/ λ which implies that λ = 8656.17 . The solution is
( ) ( )
F (9000) − F (3000) = 1 − e−9000/8656.17 − 1 − e −3000/8656.17 = 0.35.

257. Solution: E

Using the formulas for the variance and mean of the uniform distribution:
2
(100 − a ) 2  100 + a  1002 − 200a + a 2 + 3(100) 2 + 600a + 3a 2
E ( X ) = Var ( X ) + E ( X ) =
2 2
+  =
12  2  12
40, 000 + 400a + 4a 2 19, 600
= =
12 3
0= 40, 000 − 78, 400 + 400a + 4a 2
0= a 2 + 100a − 9, 600
0 =− (a 60)(a + 160)
a = 60
Then, Y is uniform on the interval 1.25(60) = 75 to 100. The 80th percentile is 75 + 0.8(25) = 95.

258. Solution: C

Using a Venn Diagram (calling the risk factors A, B, C) we get 400 + 300 + X + Y = 1000 (circle
A), 400 + 300 + X + Z = 1000 (circle B), 400 + 300 + Y + Z= 1000 (circle C). Using the first 2
equations we get Y = Z, and using the second 2 equations we get X = Y. Thus X = Y = Z = 150,
and so the total number of participants is 3(400) + 3(150) + 300 + 500 = 2450.

Page 73 of 175
 259. Solution: C

Consider the following events about a randomly selected auto insurance customer:
A = customer insures more than one car
B = customer insures a sports car
We want to find the probability of the complement of A intersecting the complement of B
(exactly one car, non-sports). We have P( Ac ∩ B c ) = 1 − P( A ∪ B) .
By the Additive Law, P ( A ∪ B )= P ( A) + P( B) − P( A ∩ B) .
P ( A ∪ B ) = P ( A) + P ( B ) – P ( A ∩ B ).
By the Multiplicative Law, P ( A= ∩ B ) P ( B | A= = 0.096 .
) P ( A) 0.15(0.64)
Then, P ( A ∪ B ) = 0.64 + 0.20 − 0.096 = 0.744 .
Finally, P( Ac ∩ B c ) =
1 − 0.744 =
0.256 .

260. Solution: E

The number of applicants with diabetes has a binomial distribution and thus
5
 200 
P( X ≤ 5) = ∑  x
(0.01) (0.99)
200 − x
= 0.134 + 0.271 + 0.272 + 0.181 + 0.090 + 0.036 = 0.984 .
x =0  x 
A faster solution is to use the Poisson distribution with λ − 200(0.01) = 2 as an approximation.
5
e−2 2 x  1 2 4 8 16 32 
Then, P( X ≤ =
5) ∑ x != e−2  1 + 1 + 2 + 6 + 24 + 120= 0.983 .
x =0

261. Solution: C

The number of sales has a binomial distribution with n = 5 and p = 0.2. Then,
5 5
P( X ≥ 2) =1 − P ( X ≤ 1) =1 −   (0.2)0 (0.8)5 −   (0.2)1 (0.8) 4 =1 − 0.328 − 0.410 =0.262 .
0 1

262. Solution: C

The number of defective computers has a binomial distribution with n = 100 and p unknown. We
have
P( X= 3)= P ( X= 2)
100  3 100  2
 p (1 −=
p )97 2   p (1 − p )
98

 3   2 
=
161, 700 p 2(4,950)(1 − p )
171, 600 p = 9,900
= =
p 9,900 /171, 600 0.058

Page 74 of 175
 263. Solution: B

P(fire damage and no theft) = 0.2(1 – 0.3) = 0.14

P(no fire damage and theft) = (1 – 0.2)(0.3) = 0.24
P(exactly one) = 0.14 + 0.24 = 0.38

264. Solution: C

Let C be the event that the employee contributes to a supplemental retirement plan and let F be
the event that the employee is female. Then, by Bayes’ Theorem,
P(C | F ) P( F ) 0.2(0.45)
= P( F | C ) = = 0.353.
P(C | F ) P( F ) + P(C | F ) P( F ) 0.2(0.45) + 0.3(0.55)
c c

265. Solution: D

Let C be the event that no claim is filed and X be the event that the policyholder is from territory
X. Then, by Bayes’ Theorem,
P(C | X ) P( X ) 0.15 P( X )
P( X | C ) = .
P(C | X ) P( X ) + P(C | X ) P( X ) 0.15 P( X ) + 0.4[1 − P( X )]
c c

From the law of total probability,

0.2 =P (C ) =P(C | X ) P( X ) + P (C )[1 − P ( X )]
= 0.15 P ( X ) + 0.4[1 − P ( X )]
0.4 −=
0.2 P( X )[0.4 − 0.15]
= =
P( X ) 0.2 / 0.25 0.8.
Then,
0.15(0.8)
=
P( X | C ) = 0.6.
0.2

266. Solution: C

The probability that a single claim is less than 25 is

25
P( X =
< 25) ∫10
x −2 dx 3 5.
10=

The probability that all three claims are less than 25 is (3 / 5)3 = 27 /125.

267. Solution: D

The distribution function of an exponential distribution with mean 0.5 is F ( x) = 1 − e−2 x .

Pr( X > 0.7) e−1.4
Pr( X > 0.7 | X > 0.4) = = −0.8 = e −0.6 = 0.549. This can be more efficiently solved
Pr( X > 0.4) e
using the memoryless property: Pr( X > 0.7 | X > 0.4) = Pr( X > 0.3) = e −0.6 = 0.549.

Page 75 of 175
268. Solution: D

Let X be the number of years in which a payment of 20 is received. X has a binomial distribution
with n = 5 and p = 0.5. Let p(x) be the probability of x payments. The expected payment is
0 p (0) + 20 p (1) + 40 p (2) + 60[1 − p (0) − p (1) − p (2)]
=0(1/ 32) + 20(5 / 32) + 40(10 / 32) + 60(16 / 32) =45.625.

269. Solution: E
The mean of the sum is 10 + 12 = 22. The standard deviation of the sum is 32 + 42 = 5 . The
probability the sum is less than 29 is the probability a standard normal random variable is less
than (29 – 22)/5 = 1.4, which is 0.9192.

270. Solution: C

The variance of the total is the sum of the variances: 1 + 1 + 2.25 + 4 = 8.25. The standard
deviation is the square root, 2.87.

271. Deleted

272 Deleted

273. Deleted

274. Deleted: D

Consider the following events about a randomly selected auto insurance customer:
A = customer insures more than one car
B = customer insures a sports car
We want to find the probability of the complement of A intersecting the complement of B
(exactly one car, non-sports).
Then,
P( Ac ∩ B c ) =
1 − P( A ∪ B)
=1 − [ P( A) + P( B) − P( A ∩ B)
P( A =
∩ B) P( B | A) P = = 0.124
( A) 0.2(0.62)
P( Ac ∩ B c ) =
1 − [0.62 + 0.15 − 0.124] =
0.354.

275. Deleted

276. Deleted

277. Deleted

278. Deleted

Page 76 of 175
 279. Deleted

280. Deleted

281. Deleted

282. Deleted

283. Deleted

284. Solution: D

X follows an exponential distribution with mean 20 5 and variance (20 5) 2 = 2000. Then,
Cov [ X , Y ]
= Var [ X ] =
Var [Y ] Corr [ X , Y ] 2000 12,500 ( 0.2 ) 1000 .
=
It follows that
Var [ X + Y ]= Var [ X ] + Var [Y ] + 2Cov [ X , Y ]= 2000 + 12,500 + 2 (1000 )= 16,500 .

285. Solution: D

Let X be the number of appraisals below θ. X is binomial with n = 4, p = 0.75.

We need exactly 1, 2 or 3 successes for the event L < θ < H to occur. The probability is
P( X =+1) P( X =+ 2) P( X = 3) =
 4 3  4 2  4
  (0.75) (0.25) +   (0.75) (0.25) +   (0.75) (0.25) = 0.0469 + 0.2109 + 0.4219 =
1 2 3 1

1  2  3
0.6797.

286. Solution: E

e − x ; the probability that the second loss is more than twice

If the first loss is X, then P( X > x) =
e −2 x . . Thus, the probability that the second loss is more than twice the
X, would be P( X > 2 x) =
∞
first loss is ∫ e −2 x e − x dx = 13 due to independence. By symmetry, the probability that the first loss
0

is more than twice the second loss is also 1/3. Thus, the answer is 2/3.

Page 77 of 175
 287. Solution: C

This is binomial where X is the number defective and n = 100. We want P ( X= 3)= 2 P ( X= 2).

100  3 100  2
 ( p) (1=
− p)97 2   ( p) (1 − p)
98

 3   2 
100*99*98 100*99
= ( p) 2 (1 − p )
3* 2*1 2*1
98
p= (1 − p)
6
6
p = 0.05769.
=
104

288. Solution: D

Let WP denote the event “Woman is Pregnant”, WNP the event “Woman is Not Pregnant”, and
TP the event “Test Shows Pregnancy”. Using Bayes Theorem:

P(TP | WP) * P(WP)

P(WP | TP) =
P(TP | WP) * P(WP) + P(TP | WNP) * P(WNP)
(1 − 0.1)(0.2) 0.18
= = = 0.5294
(1 − 0.1)(0.2) + (0.2)(1 − 0.2) 0.34

289. Solution: A

The probability function of Y, the amount paid in thousands, is

0.72 y=0
0.14 y = 200

p( y ) = 
0.06 y = 400
0.08 y = 500

E(Y) = 200 * 0.14 + 400 * 0.06 + 500 * 0.08 = 28 + 24 + 40 = 92

E(Y2) = 2002 * 0.14 + 4002 * 0.06 + 5002 * 0.08 = 35200
Var(Y) = E(Y2) – (E(Y))2 = 35200 – 922 = 26736
SD(Y)=26,7360.5 = 163.5115

Page 78 of 175
290. Solution: B

0.5 x=0
p( x) = 
0.5 x=2
E( X ) = 1
Var( X ) = 1
=
By the Central Limit Theorem: =
E( S ) 100, Var ( S ) 100.
 115 − 100 
P[ S > 115] = P  Z >  = P[ Z > 1.5] = 0.0668.
 100 

291. Solution: C

E(X) = 0.25*1 + 0.375*1 = 0.625

E(Y) = 0.125*1 + 0.375 = 0.500
E(XY) = P[X = 1, Y = 1] = 0.375
Var(X) = 0.625 – 0.6252 = 0.234
Var(Y) = 0.5 – 0.52 = 0.25
Cov(X,Y)=E(XY)-E(X)E(Y) = 0.375 – 0.625*0.500 = 0.0625
Corr(X,Y) = 0.0625/(0.234*0.25)1/2 = 0.258

292. Solution: B

6 / 21 y=0
5 / 21 y =1

4 / 21 y=2
p( y ) = 
3 / 21 y=3
2 / 21 y=4

1/ 21 y=5

E(Y) = 0*6/21 + 1*5/21 + 2*4/21 + 3*3/21 + 4*2/21 + 5*1/21 = 1.67

E(Y2) = 0*6/21 + 1*5/21 + 4*4/21 + 9*3/21 + 16*2/21 + 25*1/21 = 5
Var(Y) = 5 – (1.67)2 = 2.22

Page 79 of 175
293. Solution: D

Let W = X + Y. Then W has the probability function:

w p(w)
0 0.9729
40 0.02
80 0.002
200 0.004
240 0.001
400 0.0001
For instance, the event {W = 200} is the union of the events {X = 200, Y = 0} and
{X = 0, Y = 200}.
It follows that E(W) = 2.04, E(W2) = 278.4, and Var (W) = 274.24. Taking the square root gives
the standard deviation of 16.56.

294. Solution: B

E [X] = (0.3) (0.18) + (0.50) (0.08) + (0.20) (−0.13) = 0.068

E [Y] = (0.3) (0.15) + (0.50) (0.08) + 0(.20) (−0.06) = 0.068

V [X] = 0.3 (0.18 − 0.068)2 + .5 (0.08 − 0.068)2 + 0.2 (−0.13 − 0.068)2 = .01168
V [Y] = 0.3 (0.15 − 0.068)2 + .5 (0.07 − 0.068)2 + 0.2 (−0.06 − 0.068)2 = .00529

So X has a larger variance, but the means are equal.

295. Solution: D

Using the independence of the purchases P(exactly 3 customers purchase)

= 3(0.5)2 (0.5)(0.1) + (0.5)3 (0.9) = 0.15, and P(4 purchases = (0.5)3 (0.1) = 0.0125.
So P(at most 2) = 1 − P(3) − P(4) = 0.1625 = 0.8375.

296. Solution: A

Let x be the number of policies on male nonsmokers, and let y be the number of policies on
female smokers (to be determined). Then, by condition (ii), the number of policies on female
nonsmokers is 100 + x, so that the total number of policies on females is 100 + x + y. Next, by
condition (iii), the number of policies on male smokers is 350 − y, so that the number of policies
on males is 350 − y + x. Now, by condition (i), we have

350 − y + x = 150 + (100 + x + y).

After simplification, we obtain: 100 = 2y, which produces y = 50, the number of female smokers.

Page 80 of 175
297. Solution: C

Let the random variable X be the future lifetime of a machine part. We know that the density of
X has the form f (x) = C(10 + x)−2 for 0 < x < 40 (and it is equal to zero otherwise). First,
determine the proportionality constant C from the condition ∫ 040 f ( x)dx = 1:
40 2
1= ∫0 f ( x)dx =
− C (10 + x) −1 |040 =
25
C
so that C = 25/2 = 12.5. Then,
5
∫ 12.5(10 + x) dx =
−2
P ( X < 5) = − 12.5(10 + x) −1 |50 =
−0.8333 + 1.25 =
0.4167.
0

298. Solution: A

E(X) = 0(0.5) + 1(0.2) + 2(0.3) = 0.8

E(X2) = 02(0.5) + 12(0.2) + 22(0.3) = 1.4,
Var(X) = E(X2) - (E(X))2 = 1.4 − (0.8)2 = 0.76

The premium on a policy is 125% of 0.8, which is 1. The total premium on 76 policies is thus
76. Let Y be the total claim on 76 policies. By the Central Limit Theorem Y has approximately a
normal distribution with mean (76)(0.8) = 60.8 and variance 76(0.76) = 57.76. Consequently,
 76 − 60.8 
P(Y > 76) ≈ P(Z > P[Y > 76] = P  Z > = 2  , where Z is the standard normal random
 57.76 
variable. The answer is 1 − Φ (2) = 0.0228.

299. Solution: C

e − λA λ 0
For Group A: P[ X =0] =0.70 = ⇒ λ A =0.3567
0!
e − λB λ 0
For Group B: P [ X =0] =0.90 = ⇒ λB =0.1054
0!
e− λC λ 0
For Group C: P[ X =0] =0.50 = ⇒ λC =0.6931
0!
Then, 20, 000 × 0.3567 + 45, 000 × 0.1054 + 35, 000 × 0.6931 =
36,136

Page 81 of 175
300. Solution: E

e −0.288 0.2880
P=( 0 claims ) = 0.750
0!
−0.288
e 0.2881
P (1 claim ) = 0.216
=
1!
For three years the probability of 0 or 1 claim is
( 0.75) + ( 13 ) ( 0.75) ( 0.216 ) =
P ( 0 in 3 years)+P(1 in 3 years ) =
3 2
0.79.
Alternatively, the number of claims in three years has a Poisson distribution with mean 3(0.288)
= 0. 864. The probability of 0 or 1 claims is
e −0.864 0.8640 e −0.864 0.8641
+ =
0.79.
0! 1!

301. Solution: E

Var(Total) = Var(Fire) + Var(Theft) + 2Cov(Fire, Theft) = 5 + 8 + 2(3) = 19.

302. Solution: A

Let X 1 , X 2 , X 3 denote the number of accidents in days 1, 2, and 3, respectively.

Then, each has Poisson distribution with mean 4. Since the X i s are assumed to be independent,
X = X 1 + X 2 + X 3 has a Poisson distribution with mean 3(4) = 12. Then,
e −12120 e −12121
P [ X < 2] = P [ X =0] + P [ X =1] = + =13e −12 .
0! 1!

303. Solution: C

1 1 1
The probability of success is p = P( HHH ) + P(TTT ) = + = .
8 8 4
For the first success to be on the third experiment we need two failures followed by one success.
The probability is (3/4)(3/4)(1/4) = 9/64 = 0.141.

304. Solution: E

P[At least one Company P truck]:

P[P and (Q or R)]+P[(R or Q) and P]+P[P and P]

 4  5   4  3 
= 2    +    = 0.72.
 9  8   9  8 
Alternatively, take the complement of having no Company P trucks:
1 – (5/9)(4/8) = 0.72.

Page 82 of 175
 305. Solution: B

e −3 30 e −3 31
P ( Less than 2 Errors ) = + =4e −3 =0.199
0! 1!
 50 − 45 
P ( Time < 50 ) = P  Z <  = P ( Z < 0.5 ) = 0.6915
 10 
Due to independence of errors and time, the probability is
0.199*0.6915 = 0.1376.

306. Solution: C

H: Home Renter
A: Apartment Renter

Let T be time from purchase to cancellation. We are looking for P[ H ]T > 1] .

1 − 14 t 1
Now P (T > 1=H) ∫ e = and P (T > 1= A) ∫ e =
∞ ∞1 − t
−1 4
dt e 2
dt e −1 2 . .
1 4 1 2

P ( H ) P (T > 1 H )
Using Bayes’ Theorem, P ( H T > 1) =
P ( A ) P (T > 1 A ) + P ( H ) P (T > 1 H )
0.4e − 0.25
= 0.4612.
0.6e − 0.5 + 0.4e − 0.25

307. Solution: B

n
Sn
Let S n = ∑ X i and S =
, where the X i are the yearly benefit amounts. Then,
i =1 n
S n − 2475n S − 2475
=Z = is N(0,1) because the sum of independent normal variables is also
250 n 250 / n
normal. Then,
 2500 − 2475 
P ( S ≤ 2500 ) =P  Z < (
 =P Z < 0.1 n =0.99 )
 250 n 
( So, 0.1 n = 2.32634
= =
n 541.19, so use n 542.
The solution must be rounded up to 542 or the probability will be slightly less than 0.99.

Page 83 of 175
 308. Solution: D

Let Y be the amount paid out. The amount is 0 if the policyholder lives less than 1 year or more
than 5 years. The amount is 1000 otherwise. Then,

0.57, y=0
p( y ) = 
0.43, y = 1000

E (Y ) =
0 ( 0.57 ) + 1000 ( 0.43) =
430
E (Y 2 ) =
02 ( 0.57 ) + 10002 ( 0.43) =
430, 000
Var (Y=
) 430, 000 − 430=2 245,100
SD(Y ) = 495.

309. Solution: E

The solution uses Bayes’ Theorem.

Denote the event of Zone A by A, etc.
Denote the event of a fire occurring by F.
P ( F ) = P ( F A) P ( A) + P ( F B ) P ( B ) + P ( F C ) P ( C )
=0.015*0.4 + 0.011*0.35 + 0.008*0.25
= 0.01185.
Then P ( A F ) = P ( F A ) * P ( A ) P ( F )
= 0.015*0.4
= 0.01185 0.5063.

Page 84 of 175
 310. Solution: D

Under plan 1 the expected payment is

4 10
4 x 10 x x3 4x2
P1 = ∫ x ⋅ dx + ∫ 4 ⋅ dx = +
0 50 4 50 150 0 100 4

64  400 − 64  1136
= + == 3.786667
150  100  300
Under plan 2,
x x
P2 = ∫ 0 ⋅ dx + ∫ ( x − 4 ) ⋅ dx
4 10

0 50 4 50
10
10 x2 4x x3 x 2  1000   64 16 
= ∫ 4
− dx =
50 50
−
150 25
= 
 150
− 4 −  − 
  150 25 
4

8 32 432
=+ = = 2.88
3 150 150
So P1 −
= P2 3.78666 − 2.88
= 0.906667 .

311. Solution: C

Let Z = X – Y. The probabilities for Z are:

p(0) = 2/31 (when x = 1 and y = 1, that is (1,1))
p(1) = 6/31 (for (1,0) and (2,1))
p(2) = 14/31 (for (2,0) and (3,1))
p(3) = 9/31 (for (3,0))
Then.
1 61
E ( Z= ) [ 2(0) + 6(1) + 14(2) + 9(3)=] ,
31 31
1 143
E(Z= 2
)  2(02 ) + 6(12 ) + 14(22 ) + 9(32=
)  , and
31 31
143  61  4433 − 3721 712
2

and so Var( Z ) = −   = = = 0.7409 .

31  31  312 961

312. Solution: D

= =
M medical, P property
=
P[ M ] 0.30,= P[ P] 0.42, P[ M=
∪ P] 0.60
Therefore, P[ M= ∩ P] 0.12 (0.30 + 0.42 −
= 0.60 0.12)
P[Exactly 1] 0.48
P[Exactly 1 | Not Both]= = = 0.54545.
P[Not Both] 0.88

Page 85 of 175
 313. Solution: B

P[Reports Property Claim in Year 9]=1.258 * P[Reports Property Claim in Year 1]

P[Reports Liability Claim in Year 9]=0.758 * P[Reports Liability Claim in Year 1]

0.01 *(1.25)8 x (0.75) 8 = 0.005967

314. Solution: B

Define: N = # of claims reported in a year by a policyholder

F = event of a first-year policyholder
e −0.5 0.50
P  N ≥ 1 F ]=1 − P[ N < 1 F ]= 1 − P[ N = 0 | F  =1− = 0.393 47
0!
e−0.2 0.20
P  N ≥ 1 F C ]= 1 − P[ N < 1 F C ]= 1 − P[ N = 0 | FC  = 1− = 0.18127
  0!
P[ N ≥ 1| F ]P[ F ]
Pr[F | N ≥1] = P[ F | N ≥ 1] =
P[ N ≥ 1| F ]P[ F ] + P[ N ≥ 1| F C ]P[ F C ]
(0.39347)(0.15)
= = 0.27696
(0.39347)(0.15) + (0.18127)(0.85)

315. Solution: B

P[min(Y1 , Y2 ) > e16 ] = P[Y1 > e16 , Y2 > e16 ] = P[Y1 > e16 ]P[Y2 > e16 ] due to independence.
 16 − 16   16 − 15 
P[Y1 > e16 ]P[Y2 > e16 ]= P[ X 1 > 16]P[ X 2 > 16]= P  Z >  P Z >
 1.5   2 
= P[ Z > 0]P[ Z > 0.5] = 0.5(1 − 0.6916) = 0.15425.

316. Solution: C

P( A) + P( B) + P(C ) =1
5P(C ) + 4P(C ) + P(C ) =1
P(C ) = 0.1
P( B ) = 0.4
P( A) = 0.5

P ( C ∩ 0 Claims ) P ( 0 Claims C ) ⋅ P ( C )
P ( C 0 Claims )
= =
P ( 0 Cliaims ) P ( 0 Claims|A ) ⋅ P ( A ) + P ( 0 Claims B ) ⋅ P ( B ) + P ( 0 Claims|C ) ⋅ P ( C )
( 0.4 )(=0.1) 0.04
= 0.235
( 0.1)( 0.5) + ( 0.2 )( 0.4 ) + ( 0.4 )( 0.1) 0.05 + 0.08 + 0.04

Page 86 of 175
 317. Solution: B

Let Y be the random variable for the benefit.

0.01, y = 25, 000

0.99(0.01), y = 20, 000

0.992 (0.01), y = 15, 000
p( y) =  3
0.99 (0.01), y = 10, 000
0.994 (0.01), y = 5, 000

1 − above, y= 0

25000 ( 0.01) + 20000 ( 0.99 )( 0.01) + 15000 ( 0.99 ) ( 0.01) + 10000 ( 0.99 ) ( 0.01) + 5000 ( 0.99 ) ( 0.01)
E[Y ] =
2 3 4

= 740

318. Solution: C

Let WP = Woman Pregnant

WNP = Woman Not Pregnant
TP = Test Shows Pregnancy (Positive)

Using Bayes Theorem:

P (TP | WP ) P (WP )
P (WP | TP ) =
P (TP | WP ) P (WP ) + P (TP | WNP ) P (WNP )

=
( 0.90 )( 0.30 ) = 0.27 0.27
= = 0.6585
( 0.90 )( 0.30 ) + ( 0.20 )( 0.70 ) 0.27 + 0.14 0.41

319. Solution: C

P ( exactly 3)
= ( 3)( 0.70 ) ( 0.30 )( 0.20 ) + ( 0.70 ) ( 0.80 )
2 3

= 0.0882 + 0.2744 = 0.3626

P ( exactly 4 )
= (=
0.70 ) ( 0.20 )
3
0.0686
P ( at most 2 ) =
1 − 0.3626 − 0.0686 =
0.5688

Page 87 of 175
 320. Solution: A

=
Mean = 100, 000
of sum 100(1000)
= 100 ( 400 )
=
2
Standard deviation of sum 4, 000
92, 000 − 100, 000 
P ( X < 92, 000
= ) P  Z < =  P ( Z < −=
2 ) 0.0228
 4000 

321. Solution: A

Let X be the number of non-defective items in a randomly chosen box of 50 items.

Then X − Binomial ( 50, 1 − p ) and P(at least t * non-defective items in the box of 50 items)

= P ( X ≥ t * )= ∑ ( ) (1 − p ) ( p )
50
50 t 50 −t
t and we want this probability to be at
t =t *

least 0.95 ⇒ A is correct.

322. Solution: E

1
X has a negative binomial probability distribution, where r = 3 and p = . The probability
6
5
3 
 x − 1 r y − r r (1 − p )  6  90.
function is: p ( x) =   p q . The variance for this is Var=
(X ) = =
 r −1 
2 2
p 1
 
6

323. Solution: C

P ( 3 products )
= ( 0.45)( 0.55)( 0.60 )( 0.40 ) + ( 0.55)( 0.55)( 0.60 )( 0.60 )
+ ( 0.45 )( 0.45 )( 0.60 )( 0.60 ) + ( 0.45 )( 0.55 )( 0.40 )( 0.60 ) =
0.3006
P ( 4 products ) (=
= 0.45 )( 0.55 )( 0.60 )( 0.60 ) 0.0891
P ( 3 or 4 ) = 0.3006 + 0.0891 = 0.3897

324. Solution: B

The total number of accidents has mean 1600(4) = 6400 and variance 1600(4) = 6400. Using the
Central Limit Theorem,
 1600   6496 − 6400 
P  ∑ X i ≥ 6496  ≈ P  Ζ ≥  = P ( Ζ ≥ 1.2 ) = 1 − 0.8849 = 0.1151 .
 i =1   80 

Page 88 of 175
325. Solution: A

Let H − health
L − life
R − retirement
a (H ∩ L) =
= b (H ∩ R ) =
c (L ∩ R )

a+b = 0.625
a+c = 0.375
b + c = 0.500
( b + c ) + ( a + c ) − ( a + b ) = 2c = 0.500 + 0.375 − 0.625 = 0.25
c = 0.125

326. Solution: B

This is an exponential distribution with mean 20 and standard deviation 20. So, we want:

1 1
30 1 − 20 x − x 30

∫10 20
e dx =
e 20
10
−e − 1.5 + e − 0.5 =
= 0.3834

327. Solution: C

Average of 100 claims is normal with mean 2500 and standard deviation 500 100 = 50 .
P( X < K ) =
0.99
 K − 2500 
PZ < = 0.99
 50 
K − 2500
= 2.32635
50
K = 2616

328. Solution: B

Var[1.03X + 2.5] = (1.03)2Var[X] = (1.03) 2(50) = 53.045

Page 89 of 175
329. Solution: C

L: left-handed child
0LP: no left-handed parents
1LP: one left-handed parent
2LP: two left-handed parents

P( L | 2 LP ) = 1/ 2
P( L |1LP ) = 1/ 6
P( L | 0 LP ) = 1/16
P(2 LP ) = 1/ 50
P(1LP ) = 1/ 5
P(0 LP ) = 1 − 1/ 50 − 1/ 5 =
39 / 50
P( L | 0 LP ) P (0 LP )
P(0 LP | L) =
P( L | 0 LP ) P (0 LP ) + P ( L |1LP ) P (1LP ) + P ( L | 2 LP ) P (2 LP )
(1/16)(39 / 50) 3(39) 117
= = = 0.529
(1/16)(39 / 50) + (1/ 6)(1/ 5) + (1/ 2)(1/ 50) 3(39) + 8(10) + (24)(1) 221

330. Solution: E

(Z )
Var= Var ( 4 X − Y
= − 3) (4) 2Var ( X ) + ( − 1) 2Var
= (Y ) (16 )( 2 ) =
+ 3 35

331. Solution: A

Let H = health insurance; D =disability income insurance

x y z
Then P(H)= ; P(D) = ; P(H and not D)=
100 100 100
k
Let P(H and D) =
100
Since, P(H) = P(H and not D) + P(H and D),
x= z+k
⇒k = x−z

Since P(D) = P(D and not H) + P(D and H),

P(D and not H) = P(D) – P(D and H)
y k y − ( x − z) y − x + z
P(D and not H) = − = =
100 100 100 100

Page 90 of 175
332. Solution: B

The first die can be any number, so 6 possibilities. If the second die matches (1 possibility) then
the third die must not match (5 possibilities). Hence this outcome can occur 6(1)(5) = 30 ways. A
second outcome is the second die does not match (5 possibilities), in which case the third die
must match one of the first two (2 possibilities), for an additional 60 ways. The desired
probability is then 90/216 = 0.417.

333. Solution: D

Hypergeometric:

10   7 
  
 3  =3  75
= 0.33937
17  221
 
6

334. Solution: A

P(M) = 0.6
P(F) = 0.4
P(S|M) = 0.20
P(F|S) = 0.20

P( S | F ) P( F )
P( F | S ) =
P( S | F ) P( F ) + P( S | M ) P( M )
P ( S | F )(0.4) 0.2(0.2)(0.6)
=
0.2 ⇒ P ( S |=F) = 0.75
P ( S | F )(0.4) + 0.2(0.6) 0.4 − 0.2(0.4)

335. Solution: E

Hypergeometric:

 8  2 8 2
   +   
 2   1  = 3   0  56 + 56
= 0.9333
10  120
 
3

Page 91 of 175
 336. Solution: C

Let d be the deductible. Assume d < 100 because the expected claim needs to be positive.

The claim is 0 with probability d/100 (i.e. when the loss does not exceed d), and uniformly
distributed over [0, 100 - d] with probability (100 - d)/100 (i.e. when the loss exceeds d).

Note that the probability that a uniformly distributed random variable is in an interval is
proportional to the length of the interval; the expected value is halfway between the minimum
and maximum possible values of the uniformly distributed random variable.

0 + (100 − d ) 100 − d d
=32 E=
[Claim] [ * ] + [0* ]
2 100 100

Solving for d gives d = 20 or d = 180; disregard d = 180 > 100.

337. Solution: D

Let Y represent the loss and X represent the claim. Note that X = 0 if Y ≤ 3; otherwise,
X = Y - 3.

E[ X ]= P(Y ≤ 3) E[ X | Y ≤ 3) + P(Y > 3) E[ X | Y > 3)

= P(Y ≤ 3)(0) + P(Y > 3) E[Y − 3 | Y > 3]
y
∞ −
e 10
= 0+ ∫ dy * E[Y ] since exponentials are memoryless.
3
10
3
−
=10e 10 .

338. Solution: B

R = # of root canals, F = # of fillings, p(r, f) = P(R = r, F = f)

P(R = r | F is at most 1)
= P(R = r | F = 0 or 1)
= P(R = r AND F = 0 or 1) / P(F = 0 or 1)
= [p(r, 0) + p(r, 1)] /[p(0, 0) + p(0, 1) + p(1, 0) + p(1, 1) + p(2, 0) + p(2, 1)]

P(R = 0 | F = 0 or 1) = (0.40 + 0.26) / (0.40 + 0.26 + 0.04 + 0.03 + 0.01 + 0.01) = 22/25
P(R = 1 | F = 0 or 1) = (0.04 + 0.03) / (0.40 + 0.26 + 0.04 + 0.03 + 0.01 + 0.01) = 7/75
P(R = 2 | F = 0 or 1) = (0.01 + 0.01) / (0.40 + 0.26 + 0.04 + 0.03 + 0.01 + 0.01) = 2/75

 7   2  11
E[ R | F ≤ 1] = 1  + 2   = = 0.14667 .
 75   75  75

Page 92 of 175
 339. Solution: A

N is Binomial, n=500, p=0.12, q=0.88

Standard deviation = 500(0.12)(0.88) = 7.26636

340. Solution: E

x x
∫ 2t dt =
−3
F ( x) = −t −2 =
1 − x −2
1 1
F (4) = 15 /16
F (3) = 8 / 9
Pr(3 ≤ X < 4) F (4) − F (3) 15 /16 − 8 / 9 135 − 128 7
Pr( X < 4 | X ≥ 3) = = = = = = 0.4375
Pr( X ≥ 3) 1 − F (3) 1− 8 / 9 144 − 128 16

341. Solution: B

30
=1 ∫0 k ( x + 5) 2 dx

− k ( x + 5) −1
1= 30
0

 1 1
1= −k  − 
 35 5 
1 = k (0.171429)
k = 5.8333
10 5.8333
∫5 ( x + 5) 2
dx = 0.1944

Page 93 of 175
 342. Solution: B

e− λ λ 0 e− λ λ1
=
F (1) +
0! 1!
−λ 0
e λ e λ e−λ λ 2
−λ 1
F (2) = + +
0! 1! 2!
λ2
1+ λ +
F (2) 2= 13 26
= =
F (1) 1+ λ 5 10
10 + 10λ + 5λ 2 =26 + 26λ
5λ 2 − 16λ − 16 =0
(5λ + 4)(λ − 4) =0
λ= 4= E ( X ).
Ignore negative solution.

343. Solution: B

P[X ≥ 0] = 1
P[X ≥ 1] = 0.5
P[X ≥ 2] = 0.27639
P[X ≥ 3] = 0.18377
P[X ≥ 4] = 0.11270
P[X ≥ 5] = 0.05279

0.5, x=0
0.22361, x =1

0.09262, x=2
p( x) = 
0.07107, x=3
0.05991, x=4

0.05279, x=5

5
=
E( X ) ∑=
xi p ( xi ) 1.12565
i =0

Page 94 of 175
 344. Solution: B

Let g ( y ) represent the density function for the median.

=
g ( y ) 6( y 2 )(1 − y 2 )(2 y )
= 12( y 3 − y 5 )
1
E (Y )= ∫
0
yg ( y )dy= 12( 1 5 − 1 7 )= 24
35

1
E (Y 2 )= ∫ 0
y 2 g ( y )dy= 12( 1 6 − 1 8 )= 1
2

Var (Y ) =( 1 2 ) − ( 24 35) 2 =0.030

345. Solution: A

W – T has a normal distribution with mean 0 and variance 4 + 12 = 16.

P ( W − T < 1) = P(−1 < W − T < 1)

= P(−1 < N (0,16) < 1) = P (−.25 < N (0,1) < .25) = 0.197

346. Solution: B

The only way exactly two of the events can occur is if A and B both occur. Hence
P[ A ∩ B] =0.06.
Because the intersections of A and C and of B and C are empty,
0.90= P[ A ∪ B ∪ C ]= P[ A] + P[ B] + P[C ] − P[ A ∩ B].
The probability of exactly one of A and B is P[ A] + P[ B] − 2 P[ A ∩ B] =
0.38.
Therefore, P[ A] + P[ B] − P[ A ∩ B]= 0.38 + 0.06= 0.44.
Then, P[C] = 0.90 – 0.44 = 0.46.

347. Solution: D

0.91, y = 0
p( y) = 
0.09, y = 1
E (Y ) = (0)(0.91) + (1)(0.09) = 0.09
E (Y 2 ) = (02 )(0.91) + (12 )(0.09) = 0.09
V (Y ) =0.09 − 0.092 =0.0819
=
SD (Y ) =0.0819 0.28618
0.28618
=
CV (Y ) = 3.179797
.09

Page 95 of 175
 348. Solution: E

The policyholder will receive benefits if and only if at least 1 of the 3 losses exceeds 30.
The probability that a given loss exceeds 30 is (100 - 30)/100 = 0.7.

The probability that no losses exceed 30 is (1 − 0.7)3 = 0.027.

The probability that at least one loss exceeds 30 is 1 – 0.027 = 0.973.

349. Solution: B

P[ J ] = 0.70
P[ F ] = 0.50
P[ F | J ] = 2 P[ F | J c ]
P= = P[ F | J ]P[ J ] + P[ F | J c ]P[ J c ]
[ F ] 0.50
=0.50 P[ F | J ]0.70 + 0.50 P[ F | J ]0.30
P[ F= | J ] 0.50 / (0.70 + 0.25)
= 0.58824
P[ F ∩ J ] = P[ F | J ]P[ J ]
=
P[ F ∩ J ] 0.58824(0.70)
= 0.41176.

350. Solution: B

3000
−
P[Y ≥ 3000] = e 2000
= 0.223.

351. Solution: E

P(0 employees have accidents) = (0.6)2(0.9)2 = 0.2916

P(1 employee has accidents)

= P(1 high-risk employee has accidents and 0 low-risk employees have accidents
OR 0 high-risk employees have accidents and1 low-risk employee has accidents)

= P(1 high-risk employee has accidents)P(0 low-risk employees have accidents)

+ P(0 high-risk employees have accidents)P(1 low-risk employee has accidents)
[combining the addition rule for a union of mutually exclusive events and the multiplication rule
for independent events]

= (2)(0.4)(0.6)(0.9)2 + (0.6)2(2)(0.1)(0.9) = 0.4536

P(at most 1 employee has accidents) = 0.2916 + 0.4536 = 0.7452.

Page 96 of 175
352. Solution: D

Amt Paid Prob

0 0.70
5000 0.11
10000 0.08
15000 0.07
18000 0.04

E(X) = 3120
E(X2) =39,460,000
V(X) =39,460,000 – 3,1202 = 29,725,600
SD(X) = 5452

353. Solution: B

x x
∫ 8t dt =
−3
F ( x) = −4t −2 =
1 − 4 x −2 .
2 2
P ( 2.5 ≤ x ≤ 3 | x ≥ 2.5 )
F (3) − F (2.5) 1 − 4 / 9 − 1 + 4 / 6.25
= = = 0.3056.
1 − F (2.5) 1 − 1 + 4 / 6.25

354. Solution: B

M = Male
F = Female
A = Accident
P[ M ∩ A] =0.30
P[ M ∩ A]
P[ A | = =
M ] 0.50
P[ M ]
0.30
P[=
M] = 0.60
0.50
P[ F ] =
1 − P[ M ] =
1 − 0.60 =
0.40.

355. Solution: E

e−4 4 x
p( x) = , x = 0,1, 2,...;1 − [ p (0) + p (1) ] =
1 − 0.091578 =
0.908
x!

Page 97 of 175
 356. Solution: C

This is a geometric distribution.

n −1
 3 1
P(success on nth trial)=    , n = 1,2,3,...
 4  4
1 3 9  37 27
Solution is 1 − [ p (1) + p (2) + p (3) ] =−
1  + +  =− 1 = =0.422.
 4 16 64  64 64

357. Solution: E

1
X follows a geometric distribution with p =
6
1
Y = 1 implies the first roll is a 6. Counting from the second roll E [ X=
] = 6. So
p
E [X Y = 1] = 1 + 6 = 7 .

358. Solution: C

e −2.5 2.5 x
P[X= x=
]
x!

P[0] = 0.082, P[1] = 0.205, P[2] = 0.257, P[3] = 0.214.

Probabilities for values greater than 3 are less than the probability of 3. The largest probability
occurs at the value of 2.

359. Solution: E

P[ M | X ] = 0.3 ⇒ P[ F | X ] =0.7
P[ F | Y ] =0.4 ⇒ P[M | Y ] = 0.6
P[Y ] = 0.6 ⇒ P[ D] =0.4
P[ M | Y ]P[Y ] (0.6)(0.6)
=P[Y | M ] = = 0.75
P[ M | Y ]P[Y ] + P[ M | X ]P[ X ] (0.6)(0.6) + (0.3)(0.4)

360. Solution: A

The probability of a 20% surcharge is 0.1, the probability of a 15% surcharge is 0.9(0.1), the
probability of a 10% surcharge is 0.9(0.9)(0.1) and the probability of a 5% surcharge is
0.9(0.1)(0.1)(0.1).
Expected surcharge = 0.20(0.1) + 0.15(0.1)(0.9) + 0.10(0.1)(0.9) 2 + 0.05(0.1)(0.9)3 =
0.045245

Page 98 of 175
 361. Solution: C

Let Y be the expected payout. Then

E [Y ] = 0(0.75) + (1000 − 500 ) (0.12) + ( 5000 − 500 ) (0.08)
+ (10000 − 500 ) (0.04) + (15000 − 500 ) (0.01) =
945
The premium sis 945 + 75 = 1020 .

362. Solution: E

1
=µ 180
=   30
6
 1  5 
=σ =
180     5
 6  6 
39.5 − 30
P( X ≥ 40) → P( Z > ) = P( Z > 1.90) = 0.0287.
5

363. Solution: E

Let H be the event that the policyholder undergoes hospitalization this year.
Let A be the event that the policyholder is in class A.
P(A) = 12,000/30,000 = 0.4; P(B) = 18,000/30,000 = 0.6
P(H|A) = 1 - 0.98 = 0.02; P(H|B) = 1 - 0.995 = 0.005.
P(A|H) = P(A)P(H|A) / [P(A)P(H|A) + P(B)P(H|B)] by Bayes' Theorem
= (0.4)(0.02) / [(0.4)(0.02) + (0.6)(0.005)]
= 0.008 / 0.011 = 0.7272

364. Solution: D

Let X be the random variable that a part works. Then:

P( X > x) = e −0.2 x
P( X < x) =− 1 e −0.2 x
One year from now,
P[both parts will work | at least 1 part will work]
P [ both parts will work ]
=
P [ at least 1 part will work ]
e −0.2 e −0.2
1 − P(neither part works)
e −0.2 e −0.2
=
1 − (1 − e −0.2 )(1 − e −0.2 )
0.67032
= = 0.69310
0.96714

Page 99 of 175
365. Solution: E

P[no root canal | no fillings] = P[no root canals and no fillings] / P[no fillings]
= {1 – P[at least 1 root canal or filling]} / P[no fillings]
= (1 – 0.35)/0.7 = 13/14 = 0.92857.

366. Solution: D

This is a hypergeometric probability:

7 C3 3 C2 35(3)
= = 0.41667
10 C5 252

367. Solution: C

Heart
68

X
84 Diabete
Y s
68
Z
Cholesterol
68

68 + 84 + X + Z = 268
68 + 84 + X + Y = 268
68 + 84 + Y + Z = 268

X, Y and Z must all be equal, X = Y = Z = 58.

Total = 68 + 68 + 68 + 84 + 58 + 58 + 58 + 155 = 617

368. Solution: C

A: The event that a person is a smoker

B: The event that a person has below normal lung function.
P( A ∪ B )= P( A) + P( B) − P( A ∩ B)
P( A ∪ B )= P( A) + P( B) − P( B | A) P( A)
0.40 =0.25 + P ( B ) − (0.70)(0.25)
P( B ) = 0.325

Page 100 of 175

369. Solution: E

P [ H ∩W ] =
P [ H ] P [W ] where H is the husband’s survival and W is the wife’s survival.
0.70
P[H ] = 0.70 . Therefore, P [=
0.90 , P [ H ∩ W ] =
1 − 0.10 = W] = 77.8% and the
0.90
probability of the wife dying is 1 − P [W ] =
22.2% .

370. Solution: C

P[ B | S ]P[ S ]
P[ S | B ] =
P[ B | S ]P[ S ] + P[ B | R ]P[ R ] + P[ B | T ]P[T ] + P[ B | O]P[O]
0.08(0.25)
= 0.20408
0.08(0.25) + 0.12(0.60) + 0.06(0.10) + 0(0.05)

371. Solution: C

Using the quadratic equation and being careful with inequalities,

] P [ X < 0.127016654] + P [ X > 7.872983346]. For the standard normal
P 8 X − X 2 < 1=
X −5
variable Z = , this is:
2
P [ Z < −2.436491673] + P [ Z > 1.436491673]
= 0.0073 + 0.0749 = 0.0822.

372. Solution: A

Since the normal and uniform are symmetric the mean and median are the same and doubling
one doubles the other. For the exponential distribution the median is ln2 times the mean. Thus
doubling the mean doubles the median.

373. Solution: B

The marginal distribution of X is: P( X = 0) = 3 / 12 ; P( X = 1) = 4 / 12 ;

3 4 5
P ( X = 2) = 5 / 12 . Thus E ( X 2 ) = 0 2 × + 12 × + 22 × = 2 and
12 12 12
3 4 5 14 196 23
E( X ) = 0 × + 1× + 2× = so the variance is Var ( X ) =−
2 = = 0.639.
12 12 12 12 144 36

Page 101 of 175

374. Solution: B

To determine the mode, set f ′( x) = 5 [6( x − 2) − 4( x − 2) 3 ] = 0 . This solves for

72
6( x − 2) − 4( x − 2) = 0 so either x − 2 = 0 and x = 2 or 6 − 4( x − 2) 2 = 0 . In this case,
3

6
( x − 2) 2 = giving x= 2 ± 1.2247 , so x = 0.7753 or x = 3.2247 which is outside the domain.
4
Check these two values and the endpoints:
f (0) = 0
f (3) = 0.4167
f (2) = 0.2778
f (0.7753) = 0.4340
The mode occurs at 0.775.

375. Solution: A

β 
t 4

F (t ) =4β ∫ r dr =−
4
1   , for 0 < β ≤ t
−5

β t 
β 
4

P [T > 7 ] 1 − F ( 7 )  7  81
P [T > 4 + 3 | T >=
3] = = =
P [T > 3] 1 − F ( 3)  β  4
2401
 
3

376. Solution: C

The number of senior employees X included in the sample is distributed per the hypergeometric
distribution. The required probability is P[X = 3 or 4], which is:

 5 10   5 10 
   +   
 3  1 =  4  0  10(10) + 5(1)
= 0.07692.
15  1365
 
4

Page 102 of 175

 377. Solution: C

1100 1900 60 28
=
P( H ) = , P ( L) = , P( S | H ) = , P ( S | L)
3000 3000 1100 1900
P ( S | L) P ( L)
P( L | S ) =
P ( S | L) P ( L) + P ( S | H ) P ( H )
28 1900
1900 3000 = = 28
= 0.31818
28 1900 60 1100 28 + 60
+
1900 3000 1100 3000

378. Solution: C

Let X = the company’s profit in a given year, which is normally distributed with mean µ = 6.72,
80 percentile of 8.4, and standard deviation σ. Then,
P ( X < 8.4) =0.80
8.4 − 6.72
P( Z < )=
0.80
σ
8.4 − 6.72
= 0.84162
σ
σ =2
P − 6.72
P( Z < )=0.90
2
P − 6.72
= 1.28155
2
P = 9.28

379. Solution: B

Let X = the length of the power failure in days.

We need to find the value of m for which the cumulative probability = 0.5
m
(4 − x)3 (4 − x) 4 (4 − m) 4
m
0.5 =∫0 64 dx =−
256
1
(
= 256 − (4 − m) 4 =
256
1− )256
0

(4 − m) 4
= 0.5 ; (4 – m)4 = 128; 4 − m =4
128 ; m= 4 − 4 128
256
380. Solution: B

Let X, Y, and W denote the section length and the lengths of the two pieces trimmed from the
ends, respectively. Then the length of the finished product is L = X – Y – W + 2, which has the

Page 103 of 175

normal distribution with mean 1205 – 2 – 2 + 2 = 1203 and variance 5.0 + 0.5 + 0.5 = 6.0. Then,
P[L ≥ 1200] = P[Z ≥ –3/ 6 ] = 0.8897.

Page 104 of 175

 381. Solution: C

− x /16
This is an exponential distribution with P[ X < x] =1 − e .
P[5 < X < 20]
P[ X < 20 | X > 5] =
P[ X > 5]
P[ X < 20] − P[ X < 5]
=
P[ X > 5]
20 5
− −
(1 − e 16 ) − (1 − e 16 )
= 5
0.60839
−
16
e

382. Solution: A

X = 3 implies Y = 0 or 1
Let W be the number of pages with low graphical content. Then,
15   5  10 
   
 0 1 3 
 30  600
 
P=
(Y 0,= X 3) P= (Y 0,= W 1,= X 3)  4  = 27, 405= 0.25.
P(Y= 0 | X= 3)= = =
= P( X 3)= P( X 3)  20  10  2, 400
   27, 405
 1  3 
 30 
 
4
The denominator follows because the distribution of X is hypergeometric with categories of X
and not X. The conditional distribution of Y is Bernoulli with success probability 0.75. The
variance is 0.75(0.25) = 0.1875.

383. Solution: D

The density function is f ( x) = cx . Then

1/ n

1
1 cx1/ n +1 c cn 1+ n
1 ∫ cx dx
= =1/ n
= = ⇒=
c .
0 (1/ n) + 1 0 (1/ n) + 1 1 + n n
Let xp represent the pth percentile. Then,
xp (1 + n) x1/ n xp
=
p F ( x p=
) ∫0 n
= x1+1/ n = ( x p )1+1/ n ⇒ x=
dx
0
p p n /( n+1) .
The desired ratio is
x0.3 0.3n /( n +1)
( )
+
n 1/( n 1) n +1
= = n /( n +1)
1.5= 1.5n .
x0.2 0.2

Page 105 of 175

384. Solution: B

1
c ∫ x 2 dx =1 ⇒ c =3
0
x
= ∫ t dt x
F ( x) 3= 2 3

The (100p) percentile of a claim under the first plan is the value of x satisfying x = p .
3

Since this value of x is also the (100p2) percentile of a claim under the second plan, the
cumulative distribution function F of a claim under the second plan is F ( x=
) p= (x =
)
2
2 3
x6 .
Then differentiating yields its probability density function = ′( x) 6 x5 .
f ( x) F=

385. Solution: D

Let β be the mean of X. We know that

0.2  Pr  X  2  1 e2/ 
  8.96284
Let t be the time at which 80% of its computers have failed. Then,
0.8  Pr  X  t   1 et /8.96284
0.2  et /8.9628
t  14.42513

386. Solution: D

Let N = number of tickets the driver receives, which has a Poisson distribution with mean 4.
Note that the total fine is the sum of the integers from 1 to N, which equals N ( N + 1) .
2
So the expected total fine is
 N ( N + 1) 
E = 0.5 E ( N 2 ) + 0.5 E ( N=
) 0.5[Var ( N ) + E ( N ) 2 + E ( N )]
 2 
= 0.5(4 + 16 + 4)= 12.

Page 106 of 175

387. Solution: C
 2 d − 2
  
40  0   2  (d − 2)(d − 3)
=
The probability that the 2 most recent files are both intact is = .
51 d  d (d − 1)
 
2 
This leads to 40d − 40d =51d − 255d + 306 ⇒ 0 =11d − 215d + 306 =(11d − 17)(d − 18) .
2 2 2

Since d is an integer that is at least 3, the unique solution is d = 18.

The probability that the 3 most recent files are all intact is
 3  d − 3 
  
 0  2 =  (d − 3)(d − 4)
=
15(14) 35
= = 0.686. .
d  d (d − 1) 18(17) 51
 
2 

388. Solution: D

Let N = number of claims; let X = the benefit paid.

P(N = 0) = 0.75; P(N = 1) = 0.25
E(X | N = 0) = 0; E(X | N = 1) = 8
Var(X | N = 0) = 0; Var(X | N = 1) = 82 = 64
Var(E(X | N)) = 82(0.25)(0.75) = 12 because i) a Bernoulli (0-1) random variable has variance
p(1 - p) if p = P(Bernoulli variable = 1), and ii)the variance of 8 times the Bernoulli is 82 times
the variance of the Bernoulli
E(Var(X | N)) = 0(0.75) + 64(0.25) = 16
Var(X) = Var(E(X | N)) + E(Var(X | N)) = 12 + 16 = 28.

389. Solution: D

Let the hats (and men) be A, B, C, and D. There are 24 orderings of the hats drawn. Consider the
complement, where at least one man draws his hat.
If A is drawn first, all 6 subsequent combinations meet this event.
If B is drawn first, combinations ACD,CAD, and DCA meet this event.
If C or D is drawn first, each also have three combinations that meet this event.
Hence there are 6 + 3 + 3 + 3 = 15 ways to meet the complementary event.
The desired probability is (24-15)/24 = 0.375.

390. Solution: E

Using the probability density function for gamma distribution and integration by parts we have
∞ ∞ ∞
1 1 1 − x /3 ∞ 1
∫ 32 Γ(2) ∫ + ∫ 3e− x /3dx
2 −1 − x /3 − x /3
P( X > 4) = x e = xe dx =
− 3 xe
4
94 9 4 94
4 −4/3 1 − x /3 ∞ 4 −4/3 −4/3 7 −4/3
= e − 9e = e +e = e = 0.6151.
3 9 4 3 3

Page 107 of 175

 391. Solution: D

P[ A < 214] =
0.96
 214 − 30 
P Z < =
0.96
 σ 
214 − 30
= 1.75
σ
σ = 105.143
P[ B < 214] = 0.90
 214 − µ 
P Z < =
0.90
 105.143 
214 − µ
= 1.2816
105.143
µ = 79.25
The value for 0.96 was obtained using the closest entry in the normal table (1.75) while the value
for 0.90 (1.2816) was obtained from the list of percentiles at the bottom of the table.

392. Solution: E

8 11
  ( x − 5) 2 8 (11 − x) 2 11

c  ∫ ( x − 5 ) dx + ∫ (11 − x)dx  = c  −  = c(4.5 + 4.5) = 1
 5 8  

2 5
2 8 
1
c=
9
8
( x − 5) 2 9 −1
8
1
∫ ( x − 5 ) dx = = = 0.444.
96 9(2) 6 18

393. Solution: C

Since both events are Poisson distributed, the combination is also Poisson distributed with
λ = 0.1 + 0.02 = 0.12 per year. The claims in forty years are also Poisson distributed with
=λ 40(0.12)
= 4.8 . To find the mode, First note that
e−4.8 4.8n 4.8 e−4.8 4.8n −1 4.8
=
p ( n) = = p (n − 1).
n! n (n − 1)! n

This means that the probability increases when n < 4.8 and decreases thereafter. We have p(4) =
1.2p(3) while p(5) = 0.96p(4) and hence the mode must be at 4. The total payments are 4000.

Page 108 of 175

 394. Solution: B

x−d
1 −
− 2 e β < 0, f ( x) is monotonically decreasing for x ≥ d. Thus, the mode of X
Since f '( x) =
β
is at its lowest possible value, that being x = d.

Let p be the 10th percentile of X.

p
∫ β e
−1 − ( x − d )/ β p
0.10 =
F ( p) = −e − ( x − d )/ β
dx = 1 − e − ( p − d )/ β
=
d d

0.90 = e − ( p − d )/ β
ln(0.9) = −( p − d ) / β
p= d − β ln(0.9) = d + β ln(10 / 9).
| p − d | β ln(10 / 9)=
So,= + d − d β ln(10 / 9).

395. Solution: D

∞
∞
1 =c ∫ x −2 dx =−cx −1 =c100−1 ⇒ c =100
100
100
M
100 ∫ x −2 dx =
M
0.5 = −100 x −1 1 − 100 M −1 ⇒ M =
= 200
100
100

396. Solution: E

100 100
x1.25 k 1.25 k 1.25 x1.25
∫ kx dx =k = 1001.25 =1 ⇒ k = 1.25 and F ( x) = x =
0.25
First,
0
1.25 0 1.25 100 1.25 1001.25
The desired percentile is
Pr(20 ≤ X ≤ p) F ( p) − F (20) p1.25 − 201.25
0.9= Pr( X ≤ p | X > 20)= = =
Pr( X > 20) 1 − F (20) 1001.25 − 201.25
=p [0.9(1001.25 − 201.25 )]1/1.25 + 20=
1.25
[0.9(316.23 − 42.29) + 42.29]1/1.25
= 93.01.

397. Solution: B

The three modes for A must be at 0, 2, and 5. Therefore, the frequencies for B at these values
must be 1, 4, and 1.
For values of 1, 3 and 4 the frequencies for A are at least 4. For B they are then at most 2 for
each of these values.
There is one frequency of 4 and all other frequencies are 2 or less. Hence there is one mode, at a
value of 2.

Page 109 of 175

 398. Solution: E

Let X = event of no fires the first 2 years; Y = event of no fires the following 2 years.
Let H = event of homeowner being high-risk; L = event of homeowner being low risk.
= =
P[ H ] 0.1; P[ L] 0.9
= =
P[ X | H ] 0.8 2
; P[ X | L] 0.992
=
P[ XandY | H ] 0.8= 4
; P[ XandY | L] 0.994
P[ XandY ] P[ XandY | H ]P[ H ] + P[ XandY | L]P[ L]
=
P[Y | X ] =
P[ X ] P[ X | H ]P[ H ] + P[ X | L]P[ L]
0.84 (0.1) + 0.994 (0.9)
= 0.95709.
0.82 (0.1) + 0.992 (0.9)

399. Solution: A

A given person in this population has no cancer with probability 1 − 0.2 =0.8 , cancer other than
stage IV with probability 0.2(1 − 0.08) =
0.184 , and stage IV cancer with probability
0.2(0.08) = 0.016 .

We need to find the probability that i) out of the first n − 1 patients, n − c have no cancer, c − 5
have cancer other than stage IV, and 4 have stage IV cancer, and ii) the nth patient has stage IV
cancer.

Keeping in mind that we are given that the patients are independent, we multiply the individual
probabilities together. We then multiply this product by the number of possible orders in which
(n − 1)!
these results need to occur, to get pN ,C (n, c) = (0.8) n −c (0.184)c −5 (0.016)5 .
(n − c)!(c − 5)!4!

400. Solution: E

Let W denote the total claims received.

P (W ≥ 2) =1 − P (W < 2) = 1 − [ P( X =
0, Y =
0) + P ( X =
0, Y =
1) + P ( X =
1, Y =
0)]
 8 7 6  33
=−
1  + + = = 0.61
 54 54 54  54

Page 110 of 175

 401. Solution: C

 1000 − µ 
PZ < =0.3446
 500 
1000 − µ
= −0.40
500
µ = 1200
 P − 1200 
P  Z < 0.9 =0.90
 500 
P0.9 − 1200
= 1.2816
500
P0.9 = 1840.8

Median equals the mean or 1200, the difference is 1840.8 − 1200 =

640.8.

402. Solution: A

Var ( X )= λ= E ( X 2 ) − E ( X ) 2
=λ 0.2756 − λ 2
λ 2 + λ − 0.2756 =0
By quadratic formula: λ = 0.2250
Then: 15λ = 3.37474
Then,
P(Y > 2) =1 − P(Y ≤ 2)
1 − [ P(0) + P(1) + P(2) ]
=
 3.374740 3.374741 3.374742 
= 1 − e −3.37474  + +
 0! 1! 2! 
= 0.65536.

403. Solution: C

Hypergeometric:
 5  4  6 
   
1  3 1  = 0.040
15 
 
5 

Page 111 of 175

404. Solution: B

The marginal distribution of Y is:

24 17 10 51
pY (0) = p (0, 0) + p (1, 0) + p (2, 0) = + + =
126 126 126 126
21 14 7 42
pY (1) = p (0,1) + p (1,1) + p (2,1) = + + =
126 126 126 126
18 11 4 33
pY (2) = p (0, 2) + p (1, 2) + p (2, 2) = + + =
126 126 126 126
51 42 33 108
E (Y ) = 0 +1 +2 =
126 126 126 126
51 2 42 33 174
E (Y 2 ) = 02 +1 + 22 =
126 126 126 126
2
174  108 
V (Y ) = −   =
0.64626.
126  126 

405. Solution: A

The expected monthly payout is:

100,000 * [300,000 * P(match all 5 and bonus number) + 50,000 * P(match all 5 but no bonus
number) + 0 * P(match fewer than 5 numbers)].
1 1 1
P(Match all five and =
Bonus) = *
 30  5 712,530
 
5
1 4 4
P(Match all five and No=
Bonus) = *
 30  5 712,530
 
5
Thus, expected monthly payout equals:
 1 4 
100, 000 300, 000 + 50, 000 =
70,172.
 712,530 712,530 

Page 112 of 175

 406. Solution: E

Y is a binomial random variable with n = 5 and probability of success equal to s + t.

Next, the probability that Y = 5 is:
5
P(Y = 5) =   ( s + t )5 = c ⇒ s + t = c1/5 ⇒ s = c1/5 − t
5
Then,
s + 0.75s +=t 1.75s += t 1
t=
1 − 1.75(c1/5 − t )
t=
1 − 1.75c1/5 + 1.75t
=
0.75t 1.75c1/5 − 1
1.75c1/5 − 1 7c1/5 − 4
=t = .
0.75 3

407. Solution: E

Let X denote the time until failure. Because the median of X is 3, we have:
P( X > 3) = 0.5 = e −3/ β
3
ln 0.5 = −
β
β = 4.32809
The variance of an exponential random variable is β = 18.73232 .
2

Because the exponential distribution is memoryless, the variance of the future lifetime from t =
0.5 is also β 2 = 18.73232.

408. Solution: E
Let H be the event a single head and F be the event the fair coin is selected. Then,
P( HHH )
P( HHH | HH ) =
P( HH )
P( HH= ) P( HH | F ) P ( F ) + P ( HH | F ′) P ( F=
′) [(1/ 2)(1/ 2)](1/ 2) + [(1)(1)](1/ =
2) 5 / 8
P( HHH= ) P( HHH | F ) P( F ) + P( HHH | F ′) P( F = ′) [(1/ 2)(1/ 2)(1/ 2)](1/ 2) + [(1)(1)(1)](1/ 2)
= 9 /16
9 /16 9
=
P( HHH | HH ) = .
5 / 8 10

Page 113 of 175

409. Solution: A

Let X represent the loss. Since it is given that losses never exceed 10, we have
4 4
 10  3  15  3
=
1 P[ X ≤ 10]
= F (10)= c   ⇒ = c   .
 15   10 
Since the probability that a given loss is partially reimbursed is 0.56, we have
4 4 4 4
 m 3  15  3  m  3  m 3
0.56 =P[ X > m] =−
1 P[ X ≤ m] =−
1 F (m) =−
1 c   =− 1     =− 1   .
 15   10   15   10 
3
10 (1 − 0.56 ) 4 =
Solving for m yields m = 5.40 .

410. Solution: E

We need to find FX ,Y (2,3) =

P[ X ≤ 2 and Y ≤ 3] , which equals the probability of at most 2
tornadoes and a total loss of at most 3.
The probability of no tornadoes or exactly one tornado is 0.8 + 0.12 = 0.92, and in this situation,
the total loss is no more than 2 and is therefore no more than 3.
The probability of exactly two tornadoes is 0.05, and in this situation, the total loss is at most 3
as long as both losses are not 2, which occurs with probability 1 − (0.5) =
2
0.75 .
Therefore, FX ,Y (2,3) =
0.92 + 0.05(0.75) =
0.9575 .

411. Solution: A

Let the marginal pdf for be pY(y), for y = 0,1,2.

pY (0) = p (0, 0) + p (1, 0) + p (2, 0) + p (3, 0) =
(12 + 9 + 6 + 3) / 60 =
30 / 60
pY (1) =
p (0,1) + p (1,1) + p (2,1) + p (3,1) =
(8 + 6 + 4 + 2) / 60 =
20 / 60
pY (2) =
1 − (30 + 20) / 60 =
10 / 60
E (Y ) = 0(3 / 6) + 1(2 / 6) + 2(1/ 6) = 4 / 6
Var (Y ) =
02 (3 / 6) + 12 (2 / 6) + 22 (1/ 6) − (4 / 6) 2 =−16)
(36 = =
/ 36 20 / 36 0.56

412. Solution: D

This is the same as the probability that all three claims are less than 7, which is (0.7)3 = 0.343.

Page 114 of 175

 413. Solution: B

This is a negative binomial distribution. The probability of finding fraud is 0.9(0.2) = 0.18. Let
p(x) be the probability of examining x policies. Then,
p (1) = 0
= =
p (2) 0.18 2
0.0324
= =
p (3) 2(0.82)(0.18) 2
0.0531
= =
p (4) 3(0.82) 2
(0.18) 2 0.0654
p (5) = 1 − 0.0324 − 0.0531 − 0.0654 =0.8491
E ( X ) = 2(0.0324) + 3(0.0531) + 4(0.0654) + 5(0.8491) = 4.7312.

414. Solution: E

This is a hypergeometric problem.

 6   3  6 3
     
P[ X = 3] = 31
+ P[ X =
4] = 40
9 9
   
 4  4
= 0.4762 + 0.1190 = 0.5952.

415. Solution: B

Let C be the expected number buying the carriage only

S be the expected number buying the seat only
B be the expected number buying both

Then C + S + B + 0.60(200) = 200

C + B = 0.20(200) = 40
S + B = 0.35(200) = 70
40 + 70 – B + 120 = 200
B = 30, C = 10, S = 40
Revenue = 10(300) + 40(100) + 30(360) = 17,800

Page 115 of 175

 416. Solution: C

LetX i be the number of claims for policyholder i. We= have 1 Var= ( X i ) E ( X i ). The total
amount paid is then=
S 100( X1 +  + X1000 ) . Note that the solution employs the continuity
correction.
=
E ( S ) 100[ E ( X 1 ) +  + E ( X
= = 100, 000
1000 )] 100(1, 000)(1)

=
Var ( S ) 1002 [Var ( X 1 ) +  + Var
= ( X 1000 )] 1002 =
(1, 000)(1) 10, 000, 000
= =
StDev( S ) 10, 000, 0001/2 3,162.28
= =
Premium 1.03(100, 000) 103, 000
 103, 050 − 100, 000 
P( S > 103, 000) =
PZ > = 0.9645= 0.167
 3,162.28 

417. Solution: B

This is a negative binomial distribution.

 3
P(Second fatal crash occurs on the fourth save) =   (0.02) 2 (0.98) 2 = 0.001152.
1 

418. Solution: C

Let M = # of accidents in first year, N = # of accidents in second year.

P (=
M 1,= N 1) 0.08(0.08)
P ( M = 1, N = 1| M + N = 2) = =
= P ( M + N 2) 0.9(0.02) + 0.08(0.08) + 0.02(0.9)
0.0064
= = 0.151
0.0424

419. Solution: B

X = amount of time (years) before repair is needed, which is uniform on [0, 5]

P[ X > 4.5 | X > 2]

P[ X > 4.5]
=
P[ X > 2]
5 − 4.5
= 5 − 0 = = 0.167
1
5−2 6
5−0

Page 116 of 175

420. Solution: C

Using integration by parts

2 2

∫ xe dx =− xe − ∫ −e dx =−
−x −x 2−x 2
( 2e −2 + e −1 ) − e − x =−3e −2 + 2e −1 =0.329753.
1 1
1 1

421. Solution: C

Let X = lifetime of a television of this brand:

0.5 = 1 − e −2/7/ β
P[ X < 2.7] =
2.7 / β = 0.6931
β = 3.8953
0.875 =P[ X < P ] =−1 e − p /3.8953
p / 3.8953 = 2.0794
p = 8.10.

422. Solution: A

Since one of C or D is guaranteed to occur, and they are mutually exclusive:

P[ A] = P[ A ∩ C ] + P[ A ∩ D ] so,
P[ A ∩ D ] = 0.75 − 0.50 = 0.20 .
Then, since one of A and B is guaranteed to occur:
P[D ] = P[ A ∩ D ] + P[B ∩ D ] ,
so P[B ∩ D ] = 0.20 − 0.20 = 0.00

Page 117 of 175

423. Solution: C

We are given the following:

Overstated Didn't overstate Row Total

Claimed at least 1000 0.45 0.70
Claimed less than 1000
Column Total 0.50

This gives

Overstated Didn't overstate Row Total

Claimed at least 1000 0.45 0.25 0.70
Claimed less than 1000 0.05 0.25 0.30
Column Total 0.50 0.50 1.00

Then, P(Overstated | Less than 1000) = P(Overstated and Less than 1000)/P(Less than 1000) =
0.05/0.30 = 1/6.

424. Solution: E

There are (26C3)(3) = 7,800 ways to select the 3 distinct upper case letters and choose one for the
leading position of the password. For each of those ways, there are 4P2 = 12 ways to allocate the
other two letters among the 4 open positions. So there are 93,600 ways to allocate the letters.
For each, there are 102 ways to select and place the two digits in the remaining two open
positions. Thus, there are 9,360,000 possibilities.

425. Solution: B

Let X = number of fillings, which has a Poisson distribution with mean λ

e−λ λ 0
0.18= P[ X= 0]= = e−λ
0!
λ = 1.7147
Since the mean is 1.7147, the mode will be 1 as it can be shown that when the mean is not a
whole number, the mode is the largest whole number less than the mean. When the mean is a
whole number, there are two modes, the mean and one less than the mean.

Page 118 of 175

 426. Solution: B

50
1
=
1 ∫ ktdt
0
= 1250k ⇒=
k
1250
25
t
P[20 < T < 25] ∫ 1250dt (625 − 400) / 2500 225
P[T ≤ 25 | T ≥ 20]= = 20
= = = 0.10714
P[T > 20] 50
t (2500 − 400) / 2500 2100
∫ 1250dt
20

427. Solution: B

= =
P[ L] 0.45, P[ M ] 0.35,= P[ H ] 0.20
0.009 = P[ D] = P[ D | H ]P[ H ] + P[ D | M ]P[ M ] + P[ D | L]P[ L]
= P[ D | H ]P[ H ] + (1/ 2) P[ D | H ]P[ M ] + (1/ 6) P[ D | H ]P[ L]
= P[ D | H ]{0.20 + (1/ 2)(0.35) + (1/ 6)(0.45)}
= P[ D | H ]{0.45}
= =
P[ D | H ] 0.009 / 0.45 0.20

428. Solution: B

Let = working lifetime of chips, in years. Then

0.05 =P[ X ≤ t ] =1 − e−t /7.2
e −t /7.2 = 0.95
−t / 7.2 = −0.05129
t = 0.3693

429. Solution: E

2 2
1= ∫0 f ( x)dx = ∫0 cxdx = 2c ⇒ c = 0.5
p
=
0.8 ∫0 0.5xdx= 0.25 p 2 ⇒ =
p 3.2= 1.7889

Page 119 of 175

430. Solution: E

Let X and Y represent the exponentially distributed life spans of televisions A and B,
respectively, and let λ1 and λ2 represent the means for X and Y, respectively.
Var( X ) = λ12 = 5.6 ⇒ λ1 = 2.3664
( )
0.49 = P ( X > T ) = 1 − 1 − e −T / λ1 = e −T /2.3664 ⇒ −T / 2.3664 = −0.7133 ⇒ T = 1.6881
−T / λ2 −1.6881/ λ2
0.7 = P (Y > T ) = e =e ⇒ −1.6882 / λ2 = −0.3567 ⇒ λ2 = 4.7332 .
) λ= 4.7332= 22.403 .
Var (Y= 2
2
2

431. Solution: D

Let X i be the profit earned in quarter i. Then

 0−µ
0.8= P[ X i > 0]= P  Z > ⇒ µ / σ= 0.84
 σ 
Let S = X 1+ X 2 + X 3 + X 4 be the total profit for the year. Then S has a normal distribution with
mean 4 µ and variance 4σ 2 . Then,
 0 − 4µ 
P[ S > 0] =P Z > =−2 µ / σ =−1.68 =
0.9535.
 2σ 

432. Solution: B

 400 − 500  400 − 500

0.1056 = P[ N past < 400] = P Z <  ⇒ = −1.25 ⇒ σ = 80
 σ  σ
 370 − 550 730 − 550 
P 370 < N future < 730  = P  <Z< = P [ −1.8 < Z < 1.8] = 0.9641 − 0.0359 = 0.9282
 100 100 

433. Solution: A

Let X be the profit from flood insurance and Y be the profit from fire insurance and let S = X + Y be the
total profit. Let µ and σ be the mean and standard deviation of X.
 0−µ 0−µ
P[ X > 0] = P Z >  = 0.67 ⇒ = −0.44 ⇒ 0.44σ = µ
 σ  σ
S has a normal distribution with mean E[ X ] + E[Y ] =µ + 3µ =4 µ and standard deviation
Var ( X ) + Var (Y ) = σ 2 + 9σ 2 = 10σ .
 0 − 4 µ −4(0.44σ ) 
P[ S > 0] =P Z > = =−0.56  =
0.71
 10σ 10σ 

Page 120 of 175

434. Solution: D

Let X j = number of accidents occurring on the jth roller coaster, for j = 1, 2, which is Poisson
distributed with mean λ j .
The probability that at least one accident occurs on roller coaster j equals
e j (λ j )
−λ 0
−λ
1 − P  X j =0  =
1− = 1− e j .
0!
Since the probability that at least one accident occurs on the second roller coaster is twice that
for the first roller coaster, 1 − e − λ2 =2 (1 − e − λ1 ) . Then
e − λ2 =2e − λ1 − 1 ⇒ λ2 = ( )
− ln 2e − λ1 − 1 = ( )
− ln 2e −0.5 − 1 =
1.546 .

435. Solution: B

Standard deviation equals 85 implies mean = 85.

Let M equal the median
P[ X > M ] = 0.5
e − M /85 = 0.5
−M
= ln 0.5
85
M = 58.92
So median minus mean = 58.92 - 85 = –26.08

436. Solution: D

The mean equals the standard deviation, so is also 1000. By the memoryless property of the
exponential distribution,
∞
∞
∫ 0.001e dx =
−0.001 x
P[ X > 1500 | X > 1000] =
P[ X > 500] = −e −0.001x e −0.5 0.6065.
==
500
500

437. Solution: D

P[exactly 2 injuries]
= P[1 or 2 injuries] + P[2 or 3 injuries] – P[at least 1 injury] + P[4 or more injuries]
= 0.25 + 0.036 – 0.26 + 0.002
= 0.028

Page 121 of 175

438. Solution: E

The event that the first 5 items fill the truck to its capacity is equivalent to the event that the first
5 items include 3 items of Type A and 2 items of Type B. This is a hypergeometric probability:
 6  4 
  
 3 
=
2  20(6) 10
=
10  252 21
 
5

439. Solution: D

Let X and Y be the profits in years 1 and 2 respectively. Let S = X + Y be the total profit for the
two years.
 0−µ
0.8531 = P[ X > 0] = P  Z > ⇒ − µ / σ X = −1.05 ⇒ σ X = µ /1.05
 σ X 
 0−µ
0.9192 = P[Y > 0] = P  Z > ⇒ − µ / σ Y = −1.40 ⇒ σ X = µ /1.40
 σ Y 
E[ S ] = µ + µ = 2 µ , Var ( S ) = σ X2 + σ Y2 = µ 2 (1/1.052 + 1/1.402 ), σ S = 1.1905µ
 0 − 2µ 
P[ S > 0] =P Z > =−1.68 =
0.9535
 1.1905µ 

440. Solution: E

The distribution function for an exponential distribution is F ( x) = 1 − e− x / λ .

1 − e −400/ λ =
0.5
e −400/ λ = 0.5
−400 / λ = ln 0.5
λ = 577.08.

441. Solution: C

The variance of a uniform distribution is 1/12 of the square of the interval length. The standard
b
deviation of the hospitalization charge is = 9.6 ⇒ b = 33.255 . The standard deviation of the
12
2b − 6 2(33.255) − 6
=
surgery charge is = 17.4677.
12 12

Page 122 of 175

 442. Solution: B

b − 11
P[ X > 11] = 0.2 =
b−a
b − a = 5(b − 11)
b −8
P[ X > 8] = 0.6 =
b−a
0.6[5(b − 11)] =−
b 8
3b − 33 =b − 8
b = 12.5
a=5
(12.5 − 5) 2
=
Var ( X ) = 4.6875.
12

443. Solution: E

5 2 3 5
E[| X − 2 |] = ∫1 | x − 2 | f ( x)dx = ∫1 (2 − x) f ( x)dx ∫2 ( x − 2) f ( x)dx ∫3 ( x − 2) f ( x)dx
2 x −1 3 x −1 5 5− x
∫ (2 − x)
=
1 4
dx ∫ ( x − 2)
2 4
dx ∫ ( x − 2)
3 4
dx

444. Solution: C

Y 
The question requires calculation of E   . The joint density of X and Y is given by
X
X
1 2 3
Y 0 6/18 4/18 2/18
1 3/18 2/18 1/18

The six cells yield the quotients Y = 0, 0, 0, 1, 1/2, 1/3. The expected value of Y is thus
X X
 3  1   2  1   1  1 
   +    +    , which is
13
.
 18  1   18  2   18  3  54

Page 123 of 175

 445. Solution: C

There are 3(420) = 1260 drivers who have exactly one risk factor. There are 320 with all three
factors. Look at the 1200 drivers with the first risk factor. 420 + 320 = 740 are accounted for.
The remining 460 drivers have exactly one other risk factor. This is 230 for each and hence
3(230) = 690 with exactly two risk factors. Also adding the 480 with no risk factors gives a total
of 1260 + 320 + 690 + 480 = 2750.

446. Solution: A

We have that 11.0 = 0y + 5(2x + 2x) + 30(3x), so x =0.10. Thus y = 0.30. The variance we seek
is therefore (0–11)2(0.3) + (5–11)2(0.4) + (30–11)2(0.3) = 159.0.

447. Solution: D

Let X be loss and Y be the amount paid by the insurance. Then Y = 0 if X < 400 and Y = p(X –
400) otherwise. Then,
1000 1000
90= ∫400 p ( x − 400)(0.001)dx= p[( x − 400) 2 / 2](0.001)
400
= 180 p ⇒ p= 0.50.

448. Solution: D

Let X and Y be the two claims; X and Y are independent and identically distributed. Let U and V
the amount paid on each claim. U and V are also independent and identically distributed.
We want
P(max(U ,V ) ≤ t =) P(U ≤ t ,V ≤ t =) P(U ≤ t )2 . We have
P (U ≤ t ) = P ( X − 5 ≤ t ) = P ( X ≤ t + 5) = (t + 5) / 10.
2
5+t 
Thus, P(max(U ,V ) ≤ t ) =
  .
 10 

449. Solution: E

p (4, 9) + p (5, 9) = P (3 < X ≤ 5,8 < Y ≤ 9) = F (5, 9) − F (3, 9) − F (5,8) + F (3,8)

= 0.84 − 0.65 − 0.67 + 0.53 = 0.05

450. Solution: A

E (U ) = 100λ + 150λ + 200λ = 450λ

Var (U ) = 1002 λ + 1502 λ + 2002 λ = 72,500λ
72,500λ
=0.9 = ⇒ λ 27,500 / (0.9 ×=
450) 2 0.442
450λ

Page 124 of 175

451. Solution: B

y y
∫ e dt =
− ( t −5)
The distribution function is F ( y ) = −e − (t −5) 1 − e− ( y −5) . The density function for
=
5 5
− ( y −5) − ( y −5) 2
the first order statistic is: g1 ( y ) = 3 f ( y )[1 − F ( y )] = 3e
2
[e ] = 3e−3( y −5) . The expected
value is:
∞ ∞
∫5 3 ye
−3( y −5)
− ye−3( y −5) − (1/ 3)e − ( y −5)
dy = =
5 + 1/ 3 =
5.33.
5
Alternatively, recognize that the first order statistics is 5 plus an exponentially distributed
random variable with mean 1/3.

452. Solution: D

The group has a normal distribution with mean 25 x 1000 = 25,000 and standard deviation of
625 x (25)1/2 = 3,125.

 27,500 − 25, 000 

P[Lose Money] = P[Claims > 27,500] =P  Z >  =P[ Z > 0.80] =0.2119 .
 3125

453. Solution: C

Let p represent the percentage, expressed as a decimal; let Y represent the loss; let X represent the
claim. Then X = 0 when Y < 240 and X = p(Y – 240) otherwise. Then X has a mixed distribution
with P ( X = 0) = P (Y < 240) = 0.5 and for 0 < x < 240p,
FX ( x) = P( X ≤ x) = P( p(Y − 240) ≤ x) = P(Y ≤ 240 + x / p) = 0.5 + x / 480 p and f X ( x) = 1/ 480 p
.
Then,
240 p
0(0.5) + ∫
E (Y ) = x / (480 p )dx =
(240 p ) 2 / (960 p ) =
60 p
0
240 p
2
0 (0.5) + ∫
E (Y ) = 2
x 2 / (480 p )dx =
(240 p )3 / (1440 p ) =
9600 p 2
0

= 9600 p 2 − (60=
2000 p ) 2 6000 p 2 ⇒
= p 0.577.

2000
=
So p = 0.57735.
6000

454. Solution: B

P[claim > 300 | claim < 400] = P[loss > 700 | loss < 800] = P[700 < loss < 800] / P[loss < 800]
= [(800 - 700)/(1000 - 0)] / [(800 - 0)/(1000 - 0)] = 0.125.

Page 125 of 175

455. Solution: D

L = event that policyholder is low risk

H = event that policyholder is high risk
N = event that policyholder undergoes no hospitalizations

P[L]=0.7, P[H ]=0.3

P[N |L] = e −0.05 , P[N |H ] = e −0.3
P[ L]P[ N | L]
P[L|N ] =
P[ L]P[ N | L] + P[ H ]P[ N | H ]
0.7e −0.05
= 0.749756.
0.7e −0.05 + 0.3e −0.3

456. Solution: E

This is a hypergeometric probability:

 6  4 
  
=2  2  (=
15 ) (6)
0.42857.
10  210
 
4

457. Solution: C

The probability of at least one visit is one minus the probability of no visits. The probability of
e−110 e−2 20 e−3 30
no visits is 0.28 + 0.12 + 0.42 + 0.18 =
0.39 , so the answer is 1-0.39 = 0.61.
0! 0! 0!
458. Solution: C

Let u be the number of units of A purchased, and hence 10 – u is the number of units of B
purchased.

The payoff will be uX + (10 – u)Y. Because of independence,

Var (uX + (10 − u )Y )= u 2 30 + (10 − u )2 20= 50u 2 − 400u + 2000. Differentiating and setting the
derivative to 0 to yields u = 4. The second derivative is positive, indicating it is a minimum.

Page 126 of 175

459. Solution: D

Poisson with mean of 16 means the variance is also 16 and the standard deviation is 4. Then for
samples of size 64, the mean for the average is 16 and the standard deviation for the average is
4/8 = 0.5 Then using the normal approximation from the Central Limit Theorem:

 15 − 16 18 − 16 
P(15 < X < 18) = P  <Z<  = P(−2 < Z < 4) = 0.9772.
 0.5 0.5 

The continuity correction is not needed. If it were, the adjustment would be 1/128, not 1/2.

460. Solution: E

P( N = 1, X ≤ 2000) =0.08 P( X ≤ 2000 | N =1) =0.08(3 / 4) =

0.06
P( N = 2, X ≤ 2000) = 0.08 P( X ≤ 2000 | N =2) =0.02(1/ 2) =0.01
P( N > 0, X ≤ 2000) = 0.06 + 0.01 = 0.07
P=
( N 1, X ≤ 2000) 0.06
P( N = 1| N > 0, X ≤ 2000) = = =6/7
P( N > 0, X ≤ 2000) 0.07

461. Solution: B

Let λ represent the mean number of tickets. Then,

e −λ λ 0
e −1.5 = P(0 tickets) = = e− λ , so λ = 1.5
0!
P( X ≥ 4)
P( X ≥ 4 | =
X ≥ 1) =
P( X ≥ 1)
1 − (P(0) + P(1) + P(2) + P(3)) 0.06564
= = 0.8449.
1 − P(0) 0.77687

462. Solution: E

Let X = number of people tested until a diabetic is found

Then X is geometric with success parameter p.
m m

∑ P(X = k) ∑ p (1− p )
k −1

P(X ≤ m ) 1 − (1 − p )m
P(X ≤ m | X ≤ n) = = k =1
= k =1
= .
P(X ≤ n) 1 − (1 − p )
n n n

∑ P(X = k) ∑ p (1− p ) k −1

k =1 k =1

Page 127 of 175

463. Solution: A

λ x e−λ
Let X = number of brake jobs needed. Then, P ( X= x=
) .
x!
P( X = 0) = 0.9 = e− λ ; λ = − ln 0.9
P( X ≥ 2) =
1 − P( X =
0) − P( X = 1 − e− λ − e− λ λ =
1) = 0.00518.

464. Solution: A

The variance for a uniform distribution is the square of the interval length, divided by 12.
The standard deviation is the interval length, divided by 12 .

Since the distribution is uniform and 75% – 25% = 50%, the interquartile range is half the
interval length.

The interval length cancels in the ratio of standard deviation to interquartile range, so this ratio is
1
12 = 1
, or 1: 3 .
1 3
2

465. Solution: A

For an exponential distribution, the mean is equal to the standard deviation. Hence, the
− x /σ
distribution function is F ( x) = 1 − e . Then,
+σ )/σ
P( L > d =+ σ ) e − ( d= e − d /σ e −1
σ )/σ σ −.5
P ( L > d + 0.5
= σ ) e − ( d + 0.5= e − d /=e e − d /σ e −=
1 0.5
e =
(0.20) e0.5 0.3297.

Page 128 of 175

466. Solution: C

Let X = automobile claims and Y = homeowners claims. X and Y are binomial with n = 1.

Note that E( XY=) 1(1) Pr(=

X 1,=
Y 1) and thus E(XY) is the solution.

E( XY ) − E( X )E(Y )
ρ 0.30
= =
σ XσY

σ X= 0.1(1 − 0.1)= 0.30

σ Y = 0.05(1 − 0.05) = 0.218

E( XY ) − (0.1)(0.05)
=
Then 0.30 = ⇒ E( XY ) 0.025
(0.30)(0.218)

And E( XY ) = 0.025
467. Solution: B

The solution is the sum of (y/x)p(x,y) over the six combinations of x and y. Because the three
cases where y = 0 contribute nothing to the total, the solution is

(1/1)(1/18) + (1/2)(1/18) + (1/3)(1/18) = (6 + 3 + 2)/108 = 11/108.

468. Solution: D

Let H be the event that a driver is high-risk and L be the event that a driver is low-risk.
Let T be the event that a driver has an accident this year and N be the event that the same driver
has an accident next year. Then,
P[ N ∩ T ] P[ N ∩ T | H ]P[ H ] + P[ N ∩ T | L]P[ L]
=
P[ N | T ] =
P[T ] P[T | H ]P[ H ] + P[T | L]P[ L]
P[ N | H ]P[T | H ]P[ H ] + P[ N | L]P[T | L]P[ L]
=
P[T | H ]P[ H ] + P[T | L]P[ L]
(0.12) (0.10) + (0.05)2 (0.90)
2
= 0.6474.
(0.12)(0.10) + (0.05)(0.90)

Page 129 of 175

469. Solution: C

Let a and b be the end points of the range for this uniform distribution. Then,
a+b
=
12 ⇒ a += b 24
2
= 0.75b + 0.25a ⇒ 3b +=
18 a 72
2b = 48
b = 24
a=0
Var =
(24 − 0) 2 /12 =
48.

470. Solution: C

P ( X > 1) =
1 − P( X =
0) − P( X =
1) =
1 − 1/ 5 − (1/ 5)(4 / 5) =
16 / 25 =
(4 / 5) 2 ,
x−2
so the conditional probability function is    
1 4
, for x = 2,3, 4,....
 5  5 
This is the unconditional probability function shifted to the right by 2. Thus, the conditional
probability distribution has the same variance as the unconditional probability distribution, which
is a geometric distribution with variance (4/5)/(1/5) = 20..

471. Solution: A

x= 0 1 2
y=0 1/36 3/36 5/36
1 2/36 4/36 6/36
2 3/36 5/36 7/36
p(x) 6/36 12/36 18/36

E ( X ) =0(6 / 36) + 1(12 / 36) + 2(18 / 36) = 4 / 3

E ( X 2 ) =0(6 / 36) + 1(12 / 36) + 4(18 / 36) =7 / 3
V (X ) =
(7 / 3) − (4 / 3) 2 =
5/9 =
0.556

Page 130 of 175

472. Solution: D

n n −3 n n−2

  (0.6) (0.4) = 5   (0.6) (0.4)
3 2

 3  2
n! n!
(0.6)3 (0.4) n −3 = 5 (0.6) 2 (0.4) n − 2
(n − 3)!3! (n − 2)!2!
1 1
(0.6) = 5 (0.4)
6 (n − 2)2
1
0.1 =
n−2
n = 12

473. Solution: B

Let X represent the loss, which is uniformly distributed on the interval [0, 1], let d represent the
deductible, and let Y represent the claim on this loss. Note that we are given that 0 < d < 1.

Note that Y = max(0, X − d). So Y = 0 with probability d, and is uniformly distributed on the
interval [0, 1 − d] with probability 1 − d. Thus the expected value of the claim payment is
 0 + 1 − d  (1 − d )
2
0.245= E (Y =) d (0) + (1 − d )  =
 .
 2  2
Keeping in mind that 0 < d <1, 1 −=
d 0.49 = 0.7.
The expected value of the square of the claim payment is
(1 − d )
1− d 3
y 2 dy
( )
E Y = d (0) + (1 − d ) ∫
2 2

1− d
=
3
.
0
The variance of the claim payment on a given loss is
2
(1 − d )  (1 − d )2 
3
0.73 0.7 4
Var (Y ) = E Y ( ) − E (Y )
2
2
= −  = − = 0.0543.
3  2  3 4

474. Solution: C

Let X represent the amount of time (in years) between now and the first ticket.
Let Y represent the amount of time (in years) between the first ticket and the second ticket.
X and Y are independent and exponentially distributed with means 0.8 and μ > 0.8, respectively.

The variance of an exponential distribution is the square of its mean, and the variance of a sum
of independent random variables is the sum of the variances. Therefore, the variance of the
number of years from now to the second ticket is
2.65 = Var ( X + Y ) = Var ( X ) + Var (Y ) = 0.82 + µ 2 . Thus, µ = 2.65 − (0.8)2 = 1.418. .

Page 131 of 175

475. Solution: A

1 − P ( X ≥ 1) =1 − 0.444 =0.556, for x =0

 P( X ≥ 1) − P( X ≥ 2)
= 0.444 − 0.250= 0.194, for= x 1


p ( x=
)  P ( X ≥ 2) − P ( X ≥ 3)
= 0.250 − 0.111= 0.139, for =
x 2
 P( X ≥ 3) − P( X ≥ 4) = 0.111 − 0.028
= 0.083, for =
x 3

 P(=
 X ≥ 4) 0.028, = for x 4
E( X ) = 0(0.556) + 1(0.194) + 2(0.139) + 3(0.083) + 4(0.028) =
0.833.

476. Solution: D

Add the probabilities for number of deaths less than 2. Add the probabilities for number of
deaths less than 2 and number of disabilities at least 2. Divide second sum by first sum.
0.18
= 0.20930.
0.86

477. Solution: B

P[T ≤ 10 | T ≥ 5] = P[5 ≤ T ≤ 10] / P[T ≤ 5]

10
∫
10
ktdt t 2 75
5
20
= = 5
20
= 0.20
∫5
ktdt t 2 5 375

478. Solution: B

The variance of the sum of independent random variables is the sum of the individual variances.
So the variance of the total health insurance cost is 12 + 22 + 32 + 42 = 30 . The standard
deviation of the total cost is the square root: 30 = 5.4772.

479. Solution: D

The variance of a uniform distribution is 1 of the square of the interval length. For the
12
c
hospitalization charge: = 4 3 , so that c = 24.
12
3c − 18  3(24) − 18  54
The standard deviation of the surgery charge is =  =  = 15.5885.
12  12  12

Page 132 of 175

480. Solution: C

For one policyholder

E ( X ) =0.8(0) + 0.16(1) + 0.04(2) =0.24
E ( X 2 ) = 0.08(0) + 0.16(1) + 0.04(4) = 0.32
Var ( X ) =0.32 − 0.242 =0.2624.
Because they are independent, the variance of the sum is the sum of the variances: 144(0.2624) =
37.7856.

481. Solution: E

Each value has probability 0.2.

E ( N ) =1(0.2) + 2(0.2) + 3(0.2) + 4(0.2) + 5(0.2) = 3
E ( N 2 ) =1(0.2) + 4(0.2) + 9(0.2) + 16(0.2) + 25(0.2) =11
E(Cost) = E ( N 2 + N + 1) = E ( N 2 ) + E ( N ) + 1 = 11 + 3 + 1 = 15.

482. Solution: B

a+b
E=
(X ) = 3
2
a+b = 6
b= 6 − a
(b − a ) 2 2
V (X=
) = 1= 1
12
(6 − a − a ) 2
=1
12
a = 1.26795.

483. Solution: A

The number who test positive for disease A has a binomial distribution with n = 100 and p. Then
9 = 100p(1 – p) which implies that p = 0.1 (0.9 is also a solution but we are given that p is
between 0 and 0,5.

The probability of having at least one disease is 1 minus the probability of neither having the
disease. Thus, this probability is 1 – 0.9(0.9) = 0.19. The variance for 100 patients is
100(0.19)(0.81) = 15.29.

Page 133 of 175

 484. Solution: B

The 40th percentile for Denver is at 0.6(25) + 0.4(90) = 51.

The 20th percentile for Philadelphia is at 0.8(45) + 0.2x = 36 + 0.2x.
Equating them yields x = 75.
Therefore, Salt Lake City salaries are uniform from 10 to 25 and the median is (10 + 25)/2 =
17.5.

485. Solution: B

The 40th percentile is at 0.6a + 0.4(2a) = 1.4a.

The 80th percentile is at 0.2a + 0.8(2a) = 1.8a.
The pth percentile (treating p is a decimal) is at (1 – p)a + p(2a) = a + pa = (1 + p)a.
Then,
1.4a (1 + p)a
=
(1 + p)a 1.8a
1.4(1.8)= (1 + p) 2
1.58745 = 1 + p
= = 58.7%.
p 0.58745

486. Solution: B

The number of such claims, N, is binomial with n = 3 and p = 0.2.

P( N > 0) =1 − P( N =0) =1 − 0.83 =0.488

487. Solution: B

The denominator is the probability of not passing all three exams, which is 1 – 0.36 = 0.64. The
numerator is the probability of passing Exam 2 and not passing Exam 3. This is 0.48 – 0.36 =
0.12. The desired conditional probability is 0.12/0.64 = 0.1875.

488. Solution: B

Let N denote the number of the phone call that produced the third completed survey. For N = 8,
the preceding seven surveys must produce exactly two completed surveys. This is a binomial
7
probability,   (0.25) 2 (0.75)5 = 0.31146. The eighth call must result in a completed survey, so
 2
the total probability is 0.31146(0.25) = 0.078. A direct solution can be obtained by recognizing
this is a negative binomial random variable and remembering the probability function.

Page 134 of 175

489. Solution: C

Let b = maximum benefit. Then,

b 60 b 2 − 102 60 − b −b 2 + 120b − 100
31 = ∫ x / 50dx + ∫ b / 50dx = +b =
10 b 100 50 100
3100 =−b 2 + 120b − 100
b 2 − 120b + 3200 =0
(b − 40)(b − 80) =0.
The only feasible solution is b = 40.

490. Solution: D

Let X = # of fragile packages that break; Y = # of non-fragile packages that break. For the
denominator,
P(X + Y = 2) = P(X = 2)P(Y = 0) + P(X = 1)P(Y = 1) + P(X = 0)(Y = 2)
= [(0.2)(0.2)][(0.9)(0.9)] + [2(0.8)(0.2)][2(0.1)(0.9)] + [(0.8)(0.8)][(0.1)(0.1)] = 0.0964.
For the numerator,
P(X = 2 and X + Y = 2) = P(X = 2 and Y = 0) = (0.2)(0.2)(0.9)(0.9) = 0.0324.
The conditional probability is 0.0324/0.0964 = 0.336.

491. Solution: E
0, x<0
3
 x2 , 0 ≤ x <1
The density function is f ( x) =  2 .
2 − x , 1 ≤ x ≤ 2

0, x>2
The expected value is
13 2 3 2 25
E( X ) =∫ x3dx + ∫ x(2 − x)dx = + = .
0 2 1 8 3 24

492. Solution: C

Let X = machine’s lifetime.

= e− λ
0.80= P[ X > 1]
F ( x) =P[ X ≤ x] =1 − e − λ x =1 − 0.80 x.

493. Solution: B
0.04 + 0.03 + 0.03 + 0.02 0.12
P[Dis ≥ 2 | Death ≤ 1]
= = = 0.1395.
0.51 + 0.09 + 0.08 + 0.06 + 0.04 + 0.03 + 0.03 + 0.02 0.86

Page 135 of 175

494. Solution: C

Let X represent the number of accident-free employees; X is binomially distributed.

Let n = number of employees = 12.
Let p = the probability that a given employee is accident-free this year.
9 = E(X) = np = 12p, so p = 0.75.
Var(X) = np(1 – p) = 9(1 – 0.75) = 2.25.

495. Solution: B

7
3  x4 2
7 7
3
E[ X ]= ∫ xf ( x)dx= ∫ ( x 3
− 12 x 2
+ 36 x ) dx=  − 4 x + 18 x 
3

5
25 2 4 5
= 1.5[(7 4 − 54 ) / 4 − 4(73 − 53 ) + 18(7 2 − 52=
)] 6
7
3  x5 3
7 7
3
E[ X ]= ∫ x f ( x)dx=
2 2
∫ ( x 4
− 12 x 3
+ 36 x 2
) dx=  − 3 x + 12 x 
4

5
25 2 5 5
= 1.5[(75 − 55 ) / 5 − 3(7 4 − 54 ) + 12(73 − 53=
)] 36.6
Var ( X )= 36.6 − 62 = 0.60

496. Solution: C

The probability that a machine fails in the second year is F (2) =

1 − (1/ 2) = 1/4
0.1591.
The probability that at least one machine fails is the complement of the probability of no
machines failing, 1 − (1 − 0.1591) =
3
0.4054. The expected payment is 1000(0.4054) = 405.

497. Solution: D

− x /6
The distribution function is F ( x) = 1 − e . For a set of three independent and identically
distributed random variable, the distribution function of the minimum is
Fmin ( x) =1 − [1 − F ( x)]3 =1 − (e− x /6 )3 =1 − e− x /2 .
This is an exponential distribution with a mean of 2.

498. Solution: C

P(suburban) = 0.55(1/5) + 0.30(3/5) + 0.15(7/20) = 0.3425.

P(suburban and under 25) = 0.55(1/5) = 0.11.
P(under 25 | suburban) = 0.11/0.3425 = 0.3212.

Page 136 of 175

499. Solution: B

Let X be the number of policies sold random variable. Then,

−4  4 41 42 43 
0
1− e  + + + 
P[ X > 3]  0! 1! 2! = 3!  0.5665
P[ X > 3 | X =
≥ 1] = = 0.5771.
P[ X ≥ 1] −4  4 
0 0.9817
1− e  
 0! 

500. Solution: D

Let p be the probability of being injury-free in a given year. Using the binomial distribution,
x = P(injury-free for exactly 1 of next 2 seasons) = 2p(1 – p)
Then, P(injury-free for exactly 2 of next 4 seasons) = 6p2(1 – p)2 = 1.5[2p(1 – p)]2 = 1.5x2.

501. Solution: E

The key is that the probability of experiencing at least one loss is not needed. The population of
homeowners is split into two groups, eight with insurance and two without. Three homeowners
with losses are randomly sampled from these ten. We want the probability that at least two are
from the eight that are insured. This is a hypergeometric probability:
 8  2 8 2
     
 2   1  +  3   0  = 28(2) + 56(1) = 0.9333.
10  10  120 120
   
3 3

502. Solution: D

Let X = loss due to hospitalization, which is exponentially distributed with parameter λ.

2
0.15 =P( X ≤ 2) =∫ λ e − λ x dx =−
1 e−2λ
0
−2 λ
0.85 = e .
1 − e−10λ =
P( X ≤ 10) = 1 − 0.855 =
0.55629.

Page 137 of 175

 503. Solution: D

Let p be the probability of an accident in a given performance.

Let X = the number of performances it takes to have the first accident, which is geometrically
distributed with “success” probability p; p < 0.5.
P[ X= i ]= p (1 − p )i −1
P[ X = 2] = 0.16 = p (1 − p ) ⇒ p = 0.2
P[ X= 4]
= 0.2(0.8)=
3
0.1024

504. Solution: A

Let X be the loss, which is uniform [2, 10].

Let Y be the unreimbursed loss. Then, Y = 0.4X. Then,
2.5 p − 2
0.3 = P[Y ≤ p ] = P[0.4 X ≤ p ] = P[ X ≤ 2.5 p ] = = 5 p /16 − 1/ 4
10 − 2
5 p /16 = 3 /10 + 1/ 4 = 11/ 20
16(11)
=p = 1.76.
5(20)

505. Solution: C
If one day has a Poisson(0.2) distribution, then seven days has a Poisson(1.4) distribution.

e−1.4 (1.4)3
P[ X= 3]= = 0.1128
3!

506. Solution: C

The probability of getting one of each type when Bob is selecting is 3 × 1 × 2 =3

. The same
4 4 8
3
3 1 1 3
probability when Ann is selecting is × × 2 = . Thus, the desired probability is 8 = .
4 3 2 1 3 7
+
2 8

507. Solution: E

This is a gamma distribution with parameters α = 6, β = 100 . E( X= ) αβ= 600 .

If the distribution type is not recognized integration by parts is needed to get c and then to get the
expected value.

Page 138 of 175

 508. Solution: D

Let a represent the 2nd percentile; keep in mind that a > 0. We have the following equation:
a
∫=
2 −9 a
x(1 + x ) dx −(1 + x 2 ) −8 /16 1 − (1 + a 2 ) −8
=0.02 0
∞
= 0
∞
∫ x(1 + x ) dx −(1 + x 2 ) −8 /16
2 −9 1
0 0
2 −8
0.98= (1 + a )
1.0025285 = 1 + a 2
a = 0.050

509. Solution: B

Let µ and σ be the monthly mean and standard deviation. Then the yearly mean is 12µ and
the standard deviation is 12σ . Let X be the annual profit. Then,
0.6 = P[ X > 0] = P[ Z > −12µ / ( 12σ ) = − 12( µ / σ )].
From the normal table,
0.253347 = 12( µ / σ )
µ / σ = 0.073135.
Let Y be the monthly profit. Then,
P[Y > 0] = P[ Z > − µ / σ = −0.73135] = 0.52915.

510. Solution: C

The maximum is 2 when either X or Y is 2, the probability is 0.02+0.03+0.05+0.09+0.06 = 0.25.

The maximum is 0 when both X and Y are 0, the probability is 0.38.
Thus the maximum is 1 with probability 1 – 0.25 – 0.38 = 0.37.
The expected value is 0(0.38) + 1(0.37) + 2(0.25) = 0.87.

511. Solution: E

Let p = the probability that the insurer pays nothing for a given loss.
d
d6
∫x
5
dx
p = P [ loss ≤ d ] = 10 = 6 = d6 .
1
∫ x dx 6
5

0
P = P[insurer pays for at least 1 of 2 losses] = 1 – P[insurer pays nothing for 2 losses]
= 1− p =−
2
1 d 12 .

Then, d= (1 − P )
1/12
.

Page 139 of 175

512. Solution: D

E( X )= V( X )= λ= 20
=
V( X ) E( X 2 ) − E( X ) 2
E( X 2 ) =20 + 202 =420
E( X 2 ) + E( X ) = 420 + 20 = 440

513. Solution: D

Let X be the distance between P and the origin. Then X has the uniform distribution on [0, 3].
We seek Var(π X ) = π Var( X ) , which is:
2 2 2

π 2  E ( X 4 ) − E ( X 2 ) 2 
3
x4 243 81
E ( X=) ∫ =
4
dx =
0
3 15 5
3
x2
E=
(X 2) ∫0 3 dx 3
=

81 − 45
π 2  E ( X 4 ) − E ( X 2 ) 2  = π 2 = 36π 2 / 5.
5

514. Solution: A

We seek E(XY), which is (10)(1)p(1,10) + (12)(1)p(1,12) + (14)(1)p(1,14) + (10)(2)p(2,10) +

(12)(2)p(2,12) + (14)(2)p(2,14).
2 4 6 4 2 0 280 140
=
10(1) + 12(1) + 14(1) + 10(2) + 12(2) + 14(2) = = .
18 18 18 18 18 18 18 9

515. Solution: A

1
First, ∫ f ( x)dx = 1 => k = 4
0

and F ( x) = 1 − (1 − x) 4
Because 1 − (1 − x) = 0.5 => x = 0.1591 and this result is less than the benefit maximum, the
4

median benefit payment is 0.1591(1,000,000)= 159,000.

Page 140 of 175

516. Solution: C

Since f (r=) kr α −1 (1 − r ) β −=1 kr12 (1 − r=) k (r12 − r13 )

1 1 1
1= ∫ f (r )dr= ∫ kr (1 − r )dr= k ∫ (r12 − r13 )dr
12

0 0 0
r =1
 r13 r14  1 1 k
= k  −  = k − = .
 13 14  r =0  13 14  182
Thus, k = 182, and=
f (r ) 182(r12 − r13 )
Then,
1 1
P[ R > 0.9]
= ∫ f (r= ∫ 182r (1 − r )dr
12
)dr
0.9 0.9
r =1
 r13 r14  r =1
=182  −  =14r13 − 13r14 
r =.9
 13 14  r =.09
= 14(1 − 0.913 ) − 13(1 − 0.914 ) = 0.415.

517. Solution: B

First, note that p + q = 0.3.

Next, the expected Type I claim costs are:
(0.21 + 0.13 + q)750 =345 ⇒
0.34 + q= 0.46 ⇒ q= 0.12 ⇒ p= 0.18.
Next,
P(Y = 0) = 0.52
P(Y = 1) = 0.31
P(Y = 2) = 0.17
Finally,
E (Y 2 ) =
0.31 + 0.17(4) =
0.99
E (Y ) =
0.31 + 0.17(2) =
0.65
Var (Y ) =0.99 − 0.652 =0.5675.

Page 141 of 175

518. Solution: D

Let X represent the number of earthquakes, which is Poisson distributed with

e−λ λ i
P[ X= i ]= , for integer i ≥ 0.
i!
e−λ λ 2  e−λ λ1 
Since we are given P[ X= 2]
= 0.43P[ X= 1] , we have = 0.43   , which gives
2!  1! 
λ
= 0.43 and then λ = 0.86.
2
The probability of at least 3 earthquakes is
P[ X ≥ 3] =
1 − P[ X =
0] − P[ X =
1] − P[ X =
2]
e−λ λ 0 e−λ λ1 e−λ λ 2 −0.86  0.86 (0.86) 2 
=
1− − − =
1− e 1 + + =0.056.
0! 1! 2!  1! 2! 

519. Solution: C

Let X represent the number of minutes that city A's tornado lasts.
Let Y represent the number of minutes that city B's tornado lasts.
X and Y are independent and exponentially distributed with means 5 and 4, respectively.

The variance of an exponential distribution is the square of its mean, the variance of a sum of
independent random variables is the sum of the variances and multiplying a random variable by a
constant results in multiplying the variance by the square of the constant. Therefore, the
variance of the monetary value of the damage is
=
(5.2) 2
Var ( X + cY=) Var ( X ) + Var ( cY=) Var ( X ) + c 2 Var (Y=) 52 + c 2 (4)=2 25 + 16c 2 .

(5.2) 2 − 25
=
Solving for c gives c = 0.35707.
16

Page 142 of 175

520. Solution: B

Here are the possible vectors with their probabilities:

(w, x, y) x+y–w probability

(0,1,1) 2 2/20
(0,1,2) 3 3/20
(0,2,1) 3 3/20
(0,2,2) 4 4/20
(1,1,1) 1 1/20
(1,1,2) 2 2/20
(1,2,1) 2 2/20
(1,2,2) 3 3/20

Given that Y = 1, W is 0 with probability (2 + 3)/(2 + 3 + 1 + 2) = 5/8 and 1 with probability 3/8.
Then,
3
E (W ) =
8
3
E (W 2 ) =
8
2
3 3 15
V (W ) =−   = .
8 8 64

521. Solution: D

We want P( X + Y < 45).

The random variable X + Y is normal with mean 15 + 20 = 35 and variance 4 2 + 52 =
41.
The standard deviation of X + Y = 6.40.
Then P ( X + Y < 45=
) P ( Z < 1.5617=) 0.9408.
522. Solution: A

Let X = number of months until the motorist is charged, which is exponentially distributed with
mean β . Then,
0.5 = e −1.733/ β
β = 2.5
P (1.733 < X < 2.5) = (1 − e −2.5/2.5 ) − (1 − e −1.733/2.5 ) = 1 − e −1 − 1 + 0.5 = 0.5 − e −1.

Page 143 of 175

523. Solution: D

From the standard normal table, the 81st percentile is 0.87790 standard deviations above the
=
mean. Therefore, the 81st percentile of losses covered by Policy II is y 8000 + 0.87790(1.5k ) .
y − 8000
= 0.87790(1.5)
A loss of y covered by Policy I would be = 1.3168 standard deviations
k
above the mean. Using the standard normal table, this corresponds to the 90.6th percentile.
(Using the table provided gives 90.7.)

524. Solution: C

There are four subsets here:

Neither high blood pressure or high cholesterol: 35 – 15 = 20
Both high blood pressure and high cholesterol: 9 + 9 -15 = 3
High blood pressure only: 9 – 3 = 6
High cholesterol only: 9 – 3 = 6.

There are 6 choose 4 = 15 ways to select four with high blood pressure only.
There are 6 choose 1 = 6 ways to select one with high cholesterol only.
There are 3 chose 2 = 3 ways to select two with both high blood pressure and high cholesterol.
There are 20 choose 1 = 20 ways to select one with neither high blood pressure or high
cholesterol.

The total number of groups is 15(6)(3)(20) = 5400.

525. Solution: B

The probability of regularly watching News is 0.35 + 0.08 + 0.22 + 0.05 = 0.70.
Of those probabilities, 0.05 watch neither Movies or Sports, 0.08 + 0.22 = 0.30 watch exactly
one of Movies and Sports, and 0.35 watch both Movies and Sports.
The conditional distribution of the number of entertainment categories watched by those watch
News is then:
0 – 0.05/0.70 = 1/14
1 – 0.30/0.70 = 6/14
2 – 0.35/0.70 = 7/14.

The mean is 0(1/14) + 1(6/14) + 2(7/14) = 20/14 = 10/7.

The second moment is 0(1/14) + 1(6/14) + 4(7/14) = 34/14 = 17/7.
The variance is 17/7 – 100/49 = 0.388.

Page 144 of 175

526. Solution: C

Let T denote the total losses due to tornadoes. For each territory, the mean is 0.1 million and the
standard deviation is also 0.1 million. Then, for the sum of 50 such independent random
variables,
= = 5
E (T ) 50(0.1)
=
SD(T ) =
50(0.1) 0.7071
 5.5 − 5 
Pr(T > 5.5) = Pr  Z > = 0.7071 = 0.2397.
 0.7071 

527. Solution: D

= Var ( X + Y=
10 ) Var ( X ) + Var (Y ) + 2Cov( X , Y=) 2Var ( X ) + 2Cov( X , Y )
16= Var ( X − 2Y =
) Var ( X ) + 4Var (Y ) − 4Cov( X , Y =
) 5Var ( X ) − 4Cov( X , Y )

From the first equation, Var ( X )= 5 − Cov( X , Y ). Substituting in the second equation,
16 =5[5 − Cov( X , Y )] − 4Cov( X , Y ) =
25 − 9Cov( X , Y )
Cov( X , Y ) = 1.

528. Solution: A

Let A be the event that the fire policy is purchased and B be the event that the flood policy is
purchased. Also let x be the probability that neither is purchased:
x =−
1 P( A ∪ B ) =0.2 + P( A ∩ B ), so P( A ∩ B ) =x − 0.2.
P ( A ∩ B) 2P ( A ∩ B )
P ( A B)
First from statement iii):= = 2= P ( B A) .
P ( B) P ( A)
From the second and fourth expressions in the above line we get P ( B ) = 1 P ( A ) , since
2
P ( A ∩ B) ≠ 0 .
Now, P ( A ∪ B=
) P ( A) + P ( B ) − P ( A ∩ B ) .Substituting, we get
1 3 2 8
x P ( A) +
1 −= P ( A ) − ( x − 0.2 ) , and so 1 − 0.2 = P ( A ) . Thus =
P ( A) = ( 0.8 ) , and
2 2 3 15
1 4
P ( B=
) P ( A=) = 0.2666 .
2 15

Page 145 of 175

 529. Solution: B

This is a Poisson Random Variable. with λ = 0.25. Since we are talking about two applications,
P( x > 1) =1 − p (0) − p (1)
e −0.5 (0.5)0 e −0.5 (0.5)1
=
1− −
0! 1!
=
1 − 0.6065 − 0.3033
= 0.0902.

530. Solution: C

Label the three dice, A, B, and C in the order presented.

If A and B are selected, an 11 can be obtained only with a 5 from A and a 6 from B. The
probability is (1/6)(1/3) = 1/18
If A and C are selected, an 11 can be obtained only with a 5 from A and a 6 from C. The
probability is (1/6)(1) = 1/6.
If B and C are selected, an 11 is not possible.
The total probability is (1/3)(1/18) + (1/3)(1/6) = 4/54 = 0.0741.

531. Solution: D

Assuming independence:
P( F=
∩ T ) 0.10(0.30)
= 0.03
p= 1 − ( P( F ) + P(T ) − P( F ∩ T ) ) =
1 − ( 0.10 + 0.30 − 0.03) =
0.63.
Assuming mutually exclusive:
r= 1 − P( F ) − P(T ) =
1 − 0.10 − 0.30 =
0.60
p −=
r 0.63 − 0.60 = 0.03.

532. Solution: D

= =
P( F ) 0.05, P( FDIC ) 0.80
P( F ∩ FDIC ) P( F ∩ FDIC )
P( F | FDIC ) = 0.03 = = ⇒ P( F ∩ FDIC ) = 0.024.
P( FDIC ) 0.80
P( F ∩ FDIC ) 0.024
We want: P( FDIC=
| F) = = 0.48.
P( F ) 0.05

Page 146 of 175

 533. Solution: E

Since all employees are independent and have the same accident risk, all combinations of three
employees with accidents are equally likely. Therefore,

P[at least 1 accident in dept. B] = 1 – P[the 3 "accident" employees are all in dept. A]:
6 4
  
20 × 1 5
1−     =
3 0
1− = = 0.8333.
10  120 6
 
3

534. Solution: C
e−0.10 0.100
P[at least 1 accident during a given year] = 1 − P[0] =
1− 1 − e−0.10 .
=
0!
P[first accident in sixth year | no accidents in first two years]
= P[first accident in sixth year and no accidents in first two years] / P[no accidents in first two
years]
= P[first accident in sixth year]/ P[no accidents in first two years]
P[0]5 P[≥ 1]
= , by independence.
P[0]2
( e ) (1 − e ) = 0.070498.
−0.10 5 −0.10

(e )−0.10 2

535. Solution: A

Let:
X = loss under health insurance policy
Y = loss under dental insurance policy
Var(X) = 40,000; Var(Y) = 10,000; X and Y are independent
U = total unreimbursed loss = 0.2X + 0.1Y
=
Var(U ) Var(0.2 X + 0.1Y )
= Var(0.2 X ) + Var(0.1Y ), since independent
=0.22 Var( X ) + 0.12 Var(Y )
= 0.22 (40, 000) + 0.12 (10, 000)
= 1700.

Page 147 of 175

536. Solution: C

P ( A ∪ B ) = P (< 5) = 0.3
P ( A ∪ C ) = P (< 5 or 6) = 0.3 + 0.7 =1.0
P ( B ∪ C ) = P (< 4 or 6) = 0.1 + 0.7 = 0.8
0.3 + 1.0 + 0.8 = 2.1

537. Solution: C

In a given year, the probability of evacuating is the probability of evacuating given there is at
least one hurricane times the probability of at least one hurricane, 0.35(0.25) = 0.0875.
The probability of never evacuating in three years is 0.91253 = 0.7598.
The probability of being evacuated at least once is 1 – 0.7598 = 0.2402.

538. Solution: A

Let X = number of tests; X is geometric with success probability p = 0.0625;

P[ X= n]= (1 − 0.0625)n−1 (0.0625) for all values of n ≥ 1.
P[X = n] is maximized when the exponent n - 1 is minimized, which occurs at n = 1. The mode
of X is 1.

539. Solution: D

1
Let Y= ( X 1 + X 2 + X 3 ) . Then Y is normal, with mean 100 and variance
3
 1  27 
   (1 + 2 + 3) =9.
 9  2 
 106 − 100 
Thus P[ X > 106] = P  Z>  = P [ Z > 2] = 1 − P[ Z < 2] = 1 − Φ (2).
 9 

540. Solution: B
P[5|F]P[F] (0.2)(0.4)
P[Female | 5 Years]= = = 0.25.
P[5|F]P[F]+P[5|M]P[M] (0.2)(0.4) + (0.4)(0.6)

Page 148 of 175

 541. Solution: A

Let X = machine’s lifetime.

Let β equal the mean. Then the cumulative distribution function is: P[X < x] =1 − e− x / β and
e− x / β .
P[X > x] =
Since the exponential distribution is memoryless,
0.027= P[ X > 15 | X > 5]= P[ X > 10]= e −10/ β
β = 2.76861.
Then, P[ X > 25 | X > 5]= P[ X > 20]= e−20/2.76861= 0.000729.

542. Solution: B

Let l = number of low-risk employees; therefore, there are 76 – l high-risk employees.

For independent random variables, the variance of the sum equals the sum of the variances.
Therefore:
=
432 1849= Var[Total # of Accidents]
= l × Var[# of Accidents of Low Risk Ee] + (76-l ) × Var[# of Accidents of High Risk Ee]
= l (0.50) 2 + (76 − l )(5.50) 2
= 2299 − 30l
450 = 30l
l = 15.

543. Solution: B

Let X represent the reported loss; note that X always exceeds d and Var[X] = v.
The claim payment is p(X - d) since X always exceeds d.

Var[claim payment] = Var[p(X - d)] = p2Var[X – d] = p2Var[X] = p2v.

544. Solution: D

Let A be the probability that total claim size is at least 2000. Let B be the probability of at least
two claims.
P[ A ∩ B ]
P[ A | B ] =
P[B ]
.

P[ A ∩ B ] is the probability of exactly two claims, both of them for 1000:

(0.2)(0.5)(0.5) = 0.05 , plus the probability of exactly three claims, at least one of which is for
more than 500, which is the complement of all being 500: (0.1)[1 − (0.5) ] =
3
0.0875 , for a total
of 0.1375. P[B ] is the probability of two or more claims: 0.2 + 0.1 =
0.3. Therefore, the answer
is: 0.1375 = 0.4583.
0.3

Page 149 of 175

 545. Solution: D

This is an exponential distribution with mean 1,000,000.

F ( x) == 1 − e− x /1,000,000 . For the fifteenth percentile:
P[X < a ] =1 − e − a /1,000,000 =0.15
0.85 = e − a /1,000,000
a = 162,519.
For the ninety-fifth percentile:
P[X < b] =1 − e − b /1,000,000 =0.95
0.05 = e − b /1,000,000
b = 2,995, 732.
2, 995, 732 − 162, 519 =
2,833, 213.

546. Solution: D

Let D be the event that the board is defective and let T be the event that the test indicates that the
board is defective. We want:
P[T | D]P[ D] (0.8)(0.1) 4
=P[ D | T ] = = .
P[T | D]P[ D] + P[T | D]P[ D] (0.8)(0.1) + (0.6)(0.9) 31

547. Solution: C

Let Bi denote the event “ i was sent,” i = 0,1 , and let Ai denote the event “ i is received,”

i = 0,1 . Need to determine P [ B0 | A1 ] .

P [ B0 ] =0.7 ⇒ P [ B1 ] =0.3 , since B0 and B1 are mutually exclusive .

P [ A0 | B0 ] =⇒
0.8 P [ A1 | B0 ] =
0.2 , since A 0 and A1 are mutually exclusive .

P [ A1 | B1 ] =⇒
0.8 P [ A0 | B1 ] =
0.2 .

P [ A1 | B0 ] P [ B0 ]
P [ B0 | A1 ] =
P [ A1 | B0 ] P [ B0 ] + P [ A1 | B1 ] P [ B1 ]

=
( 0.2 )( 0.7 )
( 0.2 )( 0.7 ) + ( 0.8)( 0.3)
= 0.37.

Page 150 of 175

548. Solution: B

Let W be the event “white chip is drawn from urn B.” Let 0WT denote zero white chips
transferred. Let 1WT denote one white chip transferred. Let 2WT denote two white chips
transferred. Therefore,
P [W ] = P [W | 0WT ] P [ 0WT ] + P [W |1WT ] P [1WT ] + P [W | 2WT ] P [ 2WT ]

 4  5   4  5   4  5 
        
5  0  2  6  1  1  7  2  0  212
P[W ] = + + == 0.5354.
11  9  11  9  11  9  396
     
 2  2  2

549. Solution: D

The number of ways these 6 people can be seated at a round table is 5!. Let A and B be two left-
handed people. The number of ways 6 people can seat in a round table with A and B seating next
( 2 )( 4!) 2
to each other is (2)(4!). Therefore, the probability that both A and B sit together is = .
5! 5

Alternatively, consider having the first left-handed person take a seat at random. There are two
of five seats remaining for the other left-hander to sit in.

550. Solution: C

There are two tasks: choose two people from the five high-blood-sugar people and choose three
people from the remaining four people. Therefore,
 5  4 
Number of combinations =   = = 40 .
 10(4)
 2  3 

551. Solution: B

Let X = number of accidents, which is binomial with “success” probability 0.3 and 4 trials. We
want to find P[ X > 2].

4
 4
=
P[X > 2] ∑  k  (0.3) =
k
(0.7) 4−k
4(0.3)3 (0.7) =
+ (0.3) 4 0.0837.
k =3  

552. Solution: B

Since the lifetime has constant probability density in the interval [a, b], the 80th percentile is 80%
of the way from a to b, which equals: a + 0.8(b − a ) =a + 0.8b − 0.8a =0.2a + 0.8b.

Page 151 of 175

 553. Solution: B

 5
0.4 = 1 − exp [ −4 ln(5 / 3) / β ]
P  X < 4 ln  =
 3
exp [ −4 ln(5 / 3) / β ] =
0.6 = { }
exp ln (5 / 3) −4/ β  =
(5 / 3) −4/ β =
(0.6) 4/ β
4 / β =1
β =4
Then,
0.5 =
1 − exp(− M / 4)
=
0.5 exp(− M / 4)
ln 0.5 = − M / 4
M=
4(− ln 0.5) =
4 ln 2.

554. Solution: D

Let X be uniformly distributed on [100, 225]. Let C be the total charge:

C= 15 + 1.3 X
(225 − 100) 2
= =
Var(C ) 1.32
Var( X ) 1.32 = 2200.52
12
=
SD(C ) = 2200.52 46.91.

555. Solution: C

Let X i amount of beverage in one bottle i, in ounces: X i  N (12, σ 2 ), i = 1, , 24.

Let Y = ∑ i =1 X i = amount of beverage in one case, in ounces.
24
Y  N (288, 24σ 2 )
P[Y > 290] =
0.20
 290 − 288 
P Z > =0.20
 24σ 2 
290 − 288
= 0.84162
24σ 2
σ = 0.4851.

Page 152 of 175

 556. Solution: D

 1000 − µ 
P Z <  =
0.60
 σ
1000 − µ
= 0.253347
σ
 2000 − µ 
P Z <  =
0.80
 σ
2000 − µ
= 0.841621
σ
Divide the first equation by the second equation:
1000 − µ 0.253347
= = 0.301023
2000 − µ 0.841621
1000=− µ 602.046 − 0.301023µ
µ= (1000 − 602.046) / (1 − 0.301023) =
569.338
Then,
σ = (1000 − 569.338) / 0.253347 =
1699.89
th
Solve for the 95 percentile:
 N − 569.338 
P Z < = 0.95
 1699.89 
N − 569.338
= 1.644854
1699.89
N = 3365

557. Solution: D

Let X = # of years before malfunction, which is exponentially distributed with mean β . Then,
P [ X < x ] =1 − e − x / β
P [ X < 5] =1 − e −5/ β =0.40
e −5/ β = 0.60
−5
=β = 9.78808
ln(0.60)
which equals the standard deviation.

Page 153 of 175

 558. Solution: B

The random variable X, defined as # of mice exposed to such disease on which the third mouse
catches it, follows a negative binomial distribution. The probability for the third success on the
tenth try is:
9
  (0.45) (0.55) = 0.049943.
3 7

 
2

559. Solution: D

Let X 1 and X 2 represent the lifespans of the first and second units, respectively. Both are
modeled by an exponential distribution. The mean for Brand A is β . The mean for Brand B is
0.5β . For Brand A,
P [ X 1 > 15]= e −15/ β = 0.046656
β = 4.894038.
For Brand B: P [ X 2 >=
5] e−5/(0.5 β)
= e−5/2.447019
= 0.1296.

560. Solution: B

For an exponential distribution with random variable X and with mean 6: e− x /6 .

P[ X > x] =
p A = e− m /6 and pB = e− ( m+ 2)/6
pB e − ( m + 2)/6
= = − m /6
e −[( m=
+ 2) − m ]/6
e −1/3 .
pA e

561. Solution: E

8  2 6
There are   = 70 ways that 4 keys can be selected. Of those 70 ways,     = 40 contain
 4  1   3
exactly one fitting key. The solution is thus 40 = 0.5714.
70

Page 154 of 175

 562. Solution: B

b−4
P [ X > 4] b − a b − 4
0.9= P [ X > 4 | X > 3=
] = =
P [ X > 3] b − 3 b − 3
b−a
b=− 4 (0.9)(b − 3)
=b 1.3= / 0.1 13
7
P [ 4 < X < 11] 13 − a 7
0.7= P [ X > 4 | X < 11]= = = = 0.7
P [ X < 11] 11 − a 11 − a
13 − a
0.7(11 − a ) =
7
a =1
13 − 4 9
P[ X > 4] = = = 0.75
13 − 1 12

563. Solution: D

Let β = 400 / ln 2 be the mean. The expected claim payment is

∞ 1000 ∞
∞
∫ min ( x,1000 ) β e dx =∫ β xe dx + ∫ − ( x + β ) e− x / β
−1 − x / β − x/ β 1000
−1
1000 β −1e − x / β dx = − 1000e − x / β
0 1000
0 0 1000

β − (1000 + β ) e −1000/ β + 1000e−1000/ β =

= ( 400
)
β 1 − e−1000/ β = 1 − e−2.5ln 2 =
ln 2
(
475.06. )
564. Solution: A

Domestic :
P[1 < X < 3] = (1 − e −3/0.75 ) − (1 − e −1/0.75 ) = 0.245281
International :
P[1 < X < 3] = (1 − e −3/0.5 ) − (1 − e −1/0.5 ) = 0.132857
The desired probability is
0.4(0.245281) + 0.6(0.132857) =
0.17783.

Page 155 of 175

 565. Solution: B

This is a beta distribution with α = 4 and β =2.

αβ 4× 2 2
The variance of a Beta distribution is: = 2 = = 0.031746
(α + β ) (α + β + 1) 6 × 7 63
2

So, the standard deviation is: 0.031746 = 0.178174.

The variance can also be calculated directly. The mean is

1 1
∫ ∫
1
20 x 4 (1 − x)dx = 20 x 4 − 20 x5 )dx = 20 x5 / 5 − 20 x 6 / 6 = 20 / 5 − 20 / 6 = 2 / 3.
0 0 0
The second moment is
1 1
∫ 20 x (1 − x)dx = ∫ 20 x
1
5 5
− 20 x 6 )dx = 20 x 6 / 6 − 20 x 7 / 7 = 20 / 6 − 20 / 7 = 10 / 21.
0 0 0

The variance is 10 / 21 − (2 / 3) = 30 / 63 − 28 / 63 = 2 / 63.

2

566. Solution: D

Let X denote the number of claims in the past year for a randomly selected policy. We are
looking to find:
 e −1.21.20 e −1.21.21 e −1.21.22 
1−  + + 
P( X ≥ 3)  0! 1! 2!  0.120513
P( X ≥ 3 | X
= ≥ 1) = = = 0.17246.
P( X ≥ 1) e −1.21.20 0.698806
1−
0!

567. Solution: A

The second moment is the variance plus the square of the mean. For a binomial distribution, we
have (knowing that p must be positive)
1.80 = 5 p (1 − p ) + (5 p ) 2 = 5 p + 20 p 2
0= 20 p 2 + 5 p − 1.80
−5 ± 25 + 144 −5 + 13
=p = = 0.20.
40 40

The variance is 5 p (1 −=
p ) 5(0.2)(1 − 0.2)
= 0.80 .

Page 156 of 175

568. Solution: D

The probability a randomly selected policyholder had a claim exceeding 55,000 is given by:
 55, 000 − 50, 000 
P[claim]P[claim > 55, 000 | claim] =
0.8P  Z >  =
0.1837
 c
 55, 000 − 50, 000 
P Z >  =
0.229625
 c
55, 000 − 50, 000
= 0.74008
c
c = 6756.

569. Solution: A

Let T be the total number of theft claims, T has a binomial distribution with n = 10 and p = 0.1,
so:
10 
P[T= 0]=   (0.1)0 (0.9)10= 0.348678
0
10 
P[T= 1]=   (0.1)1 (0.9)9= 0.387420
1
Let H be the total number of hailstorm claims, H has a binomial distribution with n = 10 and p =
0.2, so:
10 
P[ H= 0] =   (0.2)0 (0.8)10= 0.107374
0
10 
P[ H= 1]=   (0.2)1 (0.8)9= 0.268435
1
P[T + H < 2]= P[T= 0]P[ H= 0] + P[T= 0]P[ H= 1] + P[T= 1]P[ H= 0]
= (0.348678)(0.107374) + (0.348678)(0.268435) + (0.387420)(0.107374)
= 0.172635.

570. Solution: C

There are 10 C3 = 120 possible and equally likely combinations of three damaged pieces.
There are three events to add up, with the indicated number of possibilities.
i) 1 damaged piece insured, 1 damaged piece partially insured, 1 damaged piece uninsured;
2 =
C1 ( 3 C1 )( = 30.
5 C1 ) 2(3)(5)
ii) 1 damaged piece insured, 2 damaged pieces partially insured, 0 damaged pieces uninsured;
( 2 C1 )( 3 C2 )(= = 6.
5 C0 ) 2(3)(1)
iii) 2 damaged pieces insured, 1 damaged piece partially insured, 0 damaged pieces uninsured;
( 2 C2 )( 3 C1 )(= = 3.
5 C0 ) 1(3)(1)
The solution is (30 + 6 + 3)/120 = 39/120 = 0.325.

Page 157 of 175

571. Solution: C
0 4
1 1 8 64 56
E( X ) = ∫ − x 2 dx + ∫ x 2 dx =
− + =
10 −2 10 0 30 30 30
0 4
1 1 16 256 272
E( X ) = ∫ − x3 dx + ∫ x3 dx = +
2
=
10 −2 10 0 40 40 40
2
272  56 
Var( X ) = −   = 3.3156.
40  30 

572. Solution: D

P[no accidents | safe]P[safe]

P[safe|no accidents] =
P[no accidents| safe]P[safe]+P[no accidents| dang]P[dang]
e −0.5 (0.4)
= 0.52.
e −0.5 (0.4) + e −1 (0.6)

573. Solution: A

The expected number of accidents for a single driver is 0.16.

The expected number of accidents for 40,000 drivers is 40,000(0.16) = 6,400
The variance of the number of accidents for a single driver is 0.16.
The variance of the number of accidents for 40,000 drivers is 40.000(0.16) = 6,400 (the variance
of the sum of independent random variables is the sum of their variances).
6400
=
CV( X ) = 0.0125.
6400

574. Solution: D

0.25, for s = 1
0.33, for s = 2

p( s) = 
0.24, for s = 3
0.18, for s = 4
E( S ) = 0.25(1) + 0.33(2) + 0.24(3) + 0.18(4) = 2.35
E( S 2 ) = 0.25(12 ) + 0.33(22 ) + 0.24(32 ) + 0.18(42 ) = 6.61
Var( S ) =6.61 − 2.352 =1.0875.

Page 158 of 175

 575. Solution: C

The yearly mean = 4 × 8 = 32

The yearly variance = 4 × 242 = 2304
Yearly standard deviation = 2304
 0 − 32 
Answer = P[ X >= 0] P  Z > =  P [ Z > −0.67 ]
 2304 

576. Solution: C

0.6 = P[lifetime < 30 | lifetime > a]

P[a < lifetime < 30]
=
P[lifetime > a ]
30 − a
= 40 = − 0 30 − a
40 − a 40 − a
40 − 0
0.60(40 − a ) = 30 − a
24 − 0.60a =− 30 a
0.40a = 6
a = 15.

577. Solution: A

X = total claim for thefts

Y = total claim for fires
= =
E ( X ) 100, E (Y ) 150
E( X + Y ) = 250
= =
Var ( X ) 40 2
, Var (Y ) 302
Var ( X + Y ) = 402 + 302 = 2500
SD( X + Y ) = 50
50
=
CV = 0.20.
250

Page 159 of 175

 578. Solution: B

Let X – automobile Insurance

Let Y – homeowners insurance
E( X + Y ) = 200 + 400 = 600
Var( X + Y )= 4002 + 3002= 250, 000
SD( X=
+Y) =
250, 000 500
 0 − 600 
P[ X + Y >=
0] P  Z > = P[ Z > −1.2].
 500 

579. Solution: C
P[1 < T < 2]
P[T < 2 | T > 1] =
P[T > 1]
2 ∞

∫ te dt / ∫ te dt =−te − e |1  / −te − e |1 
−t −t −t −t 2 −t −t ∞
=
1 1

3
 2e −1 − 3e −2  /  2e −1  =
= 1 − e −1 =
0.4482
2

580. Solution: E
Var (3 X 1 − X 2 − X 3 − X 4 )
= 9Var ( X 1 ) + Var ( X 2 ) + Var ( X 3 ) + Var ( X 4 )
= 9(9) + 9 + 9 + 9= 108

581. Solution: A

1 1 1 4
E( X ) = 0 × + 1× + 2 × =
6 3 2 3
2 1 1
E(Y ) = 0 × + 1× =
3 3 3
 1  1  1 1
E( XY )=  0 × 0 ×  + (1× 0 × 0 ) +  2 × 0 ×  + ( 0 ×1× 0 ) + 1×1×  + ( 2 ×1× 0 )=
 6  2  3 3
1 4 1 3− 4 1
Cov( X , Y ) = − × = =− .
3 3 3 9 9

Page 160 of 175

582. Solution: D

For independent random variables, the variance of the sum equals the sum of the variances.
Therefore:
Var(Annual Claim Payment) = 32 = 9
=
9 52 × Var(Weekly Claim Payment)
9
Var(Weekly Claim Payment) =
52
9 3
= =
SD(Weekly Claim Payment) .
52 52

583. Solution: C

Let X represent the loss. X is uniformly distributed on [a, b].

12 − a
0.5 = P( X < 12) =
b−a
6−a
0.875= P( X > 6) ⇒ 0.125= P( X < 6)=
b−a
0.5 12 − a
= 4=
0.125 6−a
24 − 4a = 12 − a ⇒ a = 4
12 − 4
=
0.5 ⇒= b 20
b−4
P(6 < X < 10) 4 /16
P( X < 10 | X > =
6) = = 2/7
P( X > 6) 14 /16

584. Solution: E

Let X be number of thefts in one year and S be the total number of thefts in 15 years. The sum of
15 independent Poisson distributions with mean λ is Poisson with mean 15λ.
e−λ λ 0
0.10 =P[ X ≥ 1] =1 − P[ X =0] =1 − =1 − e − λ
0!
0.9 = e − λ
λ = 0.105361
Var(=S ) 15 λ 1.580408.
=

Page 161 of 175

 585. Solution: D

3
y y2
P[2 < Y < 3] ∫2 6 − 36 dy
P[1 < Y < 3 | 2=
< Y < 4] =
P[2 < Y < 4] 4
y y2
∫2 6 − 36 dy
3
y 2 y3
−
12 108 2 0.240741
= = 4
= 0.5.
y 2 y3 0.481481
−
12 108 2

586. Solution: C

Let L represent the size (in thousands) of a single loss and let Y represent the amount paid (in
thousands) on a loss by the insurance company. Then, Y = 0.80( L − 0.5) for all losses L > 0.5
while Y = 0 for smaller losses. Then,
P(Y > 5)= P[0.8( L − 0.5) > 5]= P[ L > 6.75]= e −6.75/6 = 0.3247.

587. Solution: B

1= 2 p + 3 p + 2 p + q = 7 p + q
6 =0(q ) + 5(4 p ) + 10(3 p ) =50 p
p = 0.12
q =−
1 7 p =− 1 7(0.12) = 0.16
Var[Afternoon Routes] = (0 − 6) 2 (0.16) + (5 − 6) 2 (0.48) + (10 − 6) 2 (0.36) = 12

588. Solution: D

A single bulb’s lifetime has a variance of 1,000,000 (for an exponential distribution the variance
is the square of the mean).
The variance of the sum of five independent light bulb’s lifetimes is 5,000,000. The standard
deviation is the square root, 2,236.

Page 162 of 175

 589. Solution: B

8− x
8
= 12 ∫ ( x − 2)
E(Total Payment) dx
2
32
8
12
= ∫
32 2
10 x − x 2 − 16 dx

12  2 x3 8
=  5 x − − 16 x 
32  3 2
12
= (21.333 + 14.667)
= 13.50.
32

590. Solution: C

Probability that the event does not end in any one round:
P[ HHH ] + P[TTT ] = 0.253 + 0.753 = 0.4375 .
Probability that the event ends in any one round:
1 − 0.4375 = 0.5625.
Probability that the event ends on the fifth round
= Pr obability that the event does not end in the first four rounds and ends in the 5th round

(=
0.4375 ) ( 0.5625 )
4
0.020608.

591. Solution: E

Let X be the profit and Z be a standard normal random variable.

= P( µ − c < X < µ + c)
0.25
 µ −c−µ µ −c−µ 
= P <Z< 
 σ σ 
= P (−0.25c < Z < 0.25c)= P ( Z < 0.25c) − P( Z < −0.25c)
= P ( Z < 0.25c) − 1 + P( Z < 0.25c)
P ( Z < 0.25c) =0.625
0.25c = 0.3186
c = 1.2744
The interval runs from 20 – 1.2744 = 18.7256 to 20 + 1.2744 = 21.2744.

Page 163 of 175

592. Solution: C

Let X = number of patients who test positive for diabetes, which has a binomial distribution with n
= 18 trials and success probability p = 0.15.
n i n −i 18  18 −i 18!
P[ X = i] =   p (1 − p ) =   (0.15) (0.85) =
i
(0.15)i (0.85)18−i
i  i  i !(18 − i )!
We need to maximize P[X = i].
The mean of this distribution is np =18(0.15) = 2.7. Calculate various probabilities near the mean:
P[ X= 1]= 0.1704
P[ X= 2] = 0.2556
P[ X= 3]= 0.2406
Since binomial probabilities increase, then decrease, the mode is at X = 2.

593. Solution: E

Let X = the company’s profit in a given year.

 21 − 39 
0.28 = P[ X < 21] = P  Z <
 σ 
−18
= −0.5828
σ
σ = 30.885
 3 − 39 
P Z < = P[ Z < −1.1656]
= 0.122.
 30.885 

594. Solution: C

This is a hypergeometric probability:

P = Probability of 2 kings and no aces or jacks + Probability of 3 kings and no aces or jacks +
Probability of 4 kings and no aces or jacks

 4   8   40   4   8   40   4   8   40 
           
P =     +     +    
2 0 3 3 0 2 4 0 1
 52   52   52 
     
5 5 5
= 0.024025.

Page 164 of 175

 595. Solution: D

Let X = checkout time, in minutes. Then X has a Uniform distribution on the interval [1.1, 8.6].

y − 1.1
P[ X <
= y] = 0.95
8.6 − 1.1
y = 8.225.

596. Solution: B

Let X be the random variable for annual profit.

P[ X > 3.50] =
0.3264
 3.50 − µ 
P Z > =
0.3264
 σ 
3.50 − µ
= 0.449876
σ
P[ X > 3.62] =
0.2743
 3.62 − µ 
P Z > =
0.2743
 σ 
3.62 − µ
= 0.599860
σ
3.62 − µ 0.599860
= = 1.33339
3.50 − µ 0.449876
= µ [3.50(1.33339) − 3.62] / (1.33339
= − 1) 3.140061
σ (3.62 − 3.140061) / 0.599860 = 0.800085
=
σ 2 = 0.640136.

597. Solution: B

A given loss under each policy is uniformly distributed on [a, 19]. Since the expected claim
payment on Policy A is 10 when there is no deductible; (a + 19) / 2 =10, a =1

For policy B, the expected value is

19
19 ( x − 4) 2 152 − 02
∫4
( x − 4)(1/18)dx =
36
=
36
=
6.25.
4

Page 165 of 175

 598. Solution: A

First, E(X 2 ) = µ 2 + σ 2 = 74 .
Second:
P[ X > 0] = 0.92
 0−µ
P Z > =0.92
 σ 
0−µ
= −1.405072
σ
µ = 1.405072σ
(1.405072σ ) 2 + σ 2 =
74
2.974227σ 2 = 74
σ 2 = 24.88

599. Solution: D

Let a be the 75th percentile and b be the 25th percentile.

P[ X < x] =1 − e − x / µ
0.75 = 1 − e − a / µ
0.25 = e − a / µ
a
ln(0.25) = −
µ
a = − µ ln(0.25)
Similarly,
b = − µ ln(0.75)
a − b =− µ ln(0.25) − [ − µ ln(0.75) ]
= µ [ ln(0.75) − ln(0.25) ]
= µ ln 3

600. Solution: D

Let p = the probability that a given hospitalization loss is fully reimbursed.

0.8 + 15(0.8) 2
=
Then, p P [ loss <
= 0.8] F= (0.8) = 0.65 .
16

So, the probability that the first partially unreimbursed loss occurs on the third hospitalization is

p 2 (1 − p ) ( 0.65=
) (0.35)
2
= 0.147875 .

Page 166 of 175

 601. Solution: C

∞ 4
3  1000 
∫
1100
( x − 1100) 
1000  x 
 dx
∞ ∞

∫ 3 (1000 ) ∫ 3.3 (1000 ) x −4 dx

−3
x dx −
3 4

1100 1100

−2 ∞ ∞
3(1000) x 3
3.3(1000) 4 x −3
= −
−2 1100
−3 1100

3(1000)3 3.3(1000) 4
= −
2(1100) 2 3(1100)3
= 1239.67 − 826.45 = 413.22.

602. Solution: D

Let p represent the probability of exactly three accidents. Then,

0.95 = P[three or fewer accidents]
= P[3 accidents] + P[2 accidents] + P[1 accident] + P[0 accidents]
= p + 5 p + 4 × 5 p + 3 × 4 × 5 p = 86 p
0.95
p= .
86
Then,
P[two or fewer accidents] = P[2 accidents] + P[1 accident] + P[0 accidents]
= 5 p + 4 × 5 p + 3 × 4 × 5 p= 85 p
0.95
= 85 = 0.93895.
86

Page 167 of 175

 603. Solution: D

Let S be the number of break-ins with a security system and N be the number without. Let
E ( S ) = λ. Then,
λ
= e −=
P ( S= 0) = 3e −3
3P( N= 0)
λ ln(3e −=
−= 3
) (ln 3) − 3
λ =−3 ln 3 = 1.90139.
Let A be the event that the house has a security system and X be the number of break-ins. Then,
P( X = 2 | A) P( A)
P( A | X= 2)
=
P=( X 2 | A) P( A) + P=
( X 2 | Ac ) P( Ac )
1.901392 e −1.90139
(0.4)
P( S = 2) P( A) 2!
=
P( S= 2) P( A) + P( N= 2) P( Ac ) 1.901392 e −1.90139 32 e −3
(0.4) + (0.6)
2! 2!
0.10800
= 0.44549.
0.10800 + 0.13443

604. Solution: A

e−λ λ x
Let X be the number of tornadoes in a month where P[X= x=
] , with λ equaling the mean
x!
of the distribution.
The number of tornados in six months follows a Poisson distribution with parameter 6λ.
e −6 λ (6λ )0
P[none in six= months] = 0.008
0!
−6 λ
e = 0.008
1
−2 λ
=
e = 0.20
(0.008) 3

e −2 λ (2λ )0
P[none in two=
months] = 0.20.
0!
Due to independence, the fact that there were no tornados in June is not relevant.

605. Solution: B

Let T be the time until failure. Then,

Pr(T < 3 | A) Pr( A)
Pr( A | T < 3) =
Pr(T < 3 | A) Pr( A) + Pr(T < 3 | B) Pr( AB)
(1 − e −3/2 )0.1
= 0.1406.
(1 − e −3/2 )0.1 + (1 − e −3/4 )0.9

Page 168 of 175

 606. Solution: B

The joint density is:

y
0 1 2 Total
0 36/116 12/116 4/116 52/116
x 1 15/116 20/116 5/116 40/116
2 8/116 8/116 8/116 24/116
Total 59/116 40/116 17/116 116/116
12 40, for x = 0

=p ( x | y 1)=
20 40, for x 1
8 40, for x = 2

Variance equals
2
 2 12 2 20 2 8   12 20 8 
 0 × + 1 × + 2 ×  −  0 × + 1× + 2 × 
 40 40 40   40 40 40 
2
52  36 
=−  = 49 /100.
40  40 

607. Solution: B

Due to mutual exclusivity, 20% + 42% + 28% = 90% of the calls last at least 2 minutes and less
than 8 minutes. Also due to mutual exclusivity, 34% + 38% = 72% of the calls last at least 3
minutes and less than 7 minutes. The solution is the difference, 18%.

608. Solution: E

Let p represent the probability that a given patient has the disease.
Using the binomial formula, we have:
6 0 6 0
  p (1 − p )   p (1 − p )
6−0 6−0
3
 0 1  1− p   0 1  1− p 
=10 = =   and x =   .
6 1 6 p  6 3 20  p 
  p (1 − p )   p (1 − p )
6 −1 6 −3

1  3
 1− p 
From the first equation: 60 =   . Plug into the second equation:
 p 
1 3
=x = 60 10,800.
20

Page 169 of 175

 609. Solution: D

Let X represent the loss. Since it is given that losses never exceed 5, we have

( )
1= P[ X ≤ 5]= F (5)= c 52 + 5 = 30c ⇒ c=
1
30
.

Therefore, the probability that the insurer pays something on a given loss is
1
1 − c ( 3.2 ) + 3.2  =
1 − (13.44 ) =
2
P[ X > 3.2] =1 − P[ X ≤ 3.2] =1 − F (3.2) = 0.552
  30

610. Solution: C

Let X represent the loss. We have

m(2000 − m)
m 2000
x m m2 m2
∫0 2000 dx +
910 = ∫
m
2000
dx =
4000
+
2000
=
m−
4000
.

Solving the resulting equation m 2 − 4, 000m + 3, 640, 000 =

0 for m using the quadratic formula
yields m = 1400, since the other solution, m = 2600, exceeds 2000.

611. Solution: E

First find the constant c of the density function.

8 11

c  ∫ ( x − 5)dx + ∫ (11 − x)dx  =
1
5 8 
c [ 4.5 + 4.5] = 1
1
c= .
9
The cumulative distribution function from 5 to 8 is:
x
y −5
x ( y − 5) 2 ( x − 5) 2
F ( x) ∫ =
= dy = .
5 9 18 5 18
Because F(8) = 0.5, the 30th percentile must be less than 8. Then,
(m − 5) 2
=
0.3 F= ( m)
18
= (m − 5)
5.4 2

2.324= m − 5
m = 7.324

Page 170 of 175

612. Solution: A

First, solve for c for this exponential distribution:

10
ln 2
∫0 ce dx =
− cx
1 − e −10 c =0.5 => c = =0.069315
10
Next, the expected cost of the warranty is:
35 F (5) + 25[ F (7.5) − F (5)]
= 35(1 − e −5c ) + 25(e −5c − e −7.5c )
= 35(1 − 0.70711) + 25(0.70711 − 0.5946) =
13.06.

613. Solution: D

Let λ1 and λ2 represent the means of the numbers of accidents at the first and second
e − λ2 λ2 0  e − λ1 λ10 
construction sites, respectively. From the given data, we have = 1.1  which
0!  0! 
simplifies to e − λ2 = 1.1e − λ1 . and λ1 = 1.5 . So λ1 = (1.5 ) and then,
2

e − λ2 1.1e − (1.5) ⇒ =
= −λ2 (ln1.1) − (1.5) 2 ⇒=
λ2 (1.5) 2 − ln1.1 .
2

The standard deviation for the number of accidents at the second construction site is
λ2 = (1.5) 2 − ln1.1= 1.46789.

614. Solution: C

For independent random variables, the variance of the sum is the sum of the variances.
Therefore, the standard deviation of the company's two-year profit is 11002 + 26402 =
2860 .
Let X represent the two-year profit.
 0 − (660 + µ ) 
P [ X > 0]= P  Z > = 0.8643
 2860
 0 − (660 + µ ) 
P Z <  =0.1357
 2860
0 − (660 + µ )
= −1.099844
2860
µ = 2485.55.

Page 171 of 175

615. Solution: B

Let D be the number of accidents in one day. Due to independence the expected number of
accidents in one day is E(D) = 63/7 = 9. For a Poisson distribution the variance is equal to the
mean. Thus, Var(= D) E( =D) 9,SD( = D) 3.

The probability of being two more standard deviations below the mean is
P[ D ≤ 9 − 2 × 3]
= P[ D ≤ 3]
P [ D =+
= 0] P [ D =+
1] P [ D =+
2] P [ D =
3]
e −9 90 e −9 91 e −9 92 e −9 93
= + + +
0! 1! 2! 3!
= 0.000123 + 0.001111 + 0.004998 + 0.014994 = 0.021226.

616. Solution: C

For Random Number Generator C:

(10 − 0)
2

=
Var(C ) = =
8.3333,SD( C) = 8.3333 2.8868
12
For Random Number Generator D:
1
E( D=
) [0 + 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10=] 5
11
1 2 2
E( D=
2
) 0 + 1 + 22 + 32 + 42 + 52 + 62 + 7 2 + 82 + 92 + 102=
 35
11
Var( D) = 35 − 52 = 10, SD( D) = 10 = 3.1623.
The absolute difference is: | 2.8868 − 3.1623 |= 0.2755.

617. Solution: D

Var(T|F = 1) = E(T2|F = 1) – {E(T|F = 1)}2. To calculate these two expected values, we must
first find the conditional probability mass function p(t|F = 1), where t = 0,1,2.
=14 =
0.56, t 0
 25

p (t | F= 1)=  8 = 0.32, t= 1
25

= =
 3 25 0.12, t 2

E(T | F = 1) = 0(0.56) + 1(0.32) + 2(0.12) =
0.56
E(T 2 | F =
1) =
02 (0.56) + 12 (0.32) + 22 (0.12) =
0.80
Var(T | F =
1) =
0.80 − 0.562 =
0.4864.

Page 172 of 175

 618. Solution: B

a+b
= 8.5, a= 17 − b
2
(b − a ) 2
= 0.75, (b − a ) 2= 9, b − a= 3
12
b − (17 − b=) 3, 2b= 20, b= 10
a = 17 − 10 = 7
10 − 9
P[ X > 9 | X > 7.5] = 10 − 7 = 1.0 = 0.40.
10 − 7.5 2.5
10 − 7

619. Solution: E

e − λ λ 4 54e − λ λ 0
=
4! 0!
λ4
= 54
4!
=λ 4 1296,
= λ 6
The expected number of hits in a 60-minute period is 60(6) = 360.

620. Solution: B

=
P[3 products] ( 0.55)( 0.45)( 0.50 )( 0.40 ) + ( 0.45)( 0.45)( 0.50 )( 0.60 )
+ ( 0.55 )( 0.55 )( 0.50 )( 0.60 ) + ( 0.55 )( 0.45 )( 0.50 )( 0.60 ) =
0.27525
P[4 products] (=
= 0.55 )( 0.45 )( 0.50 )( 0.60 ) 0.07425
So P ( 3 or 4 ) = 0.27525 + 0.07425 = 0.3495 .

621. Solution: D

Since exponential distributions are memoryless,

P[15 < X < 35 | X > 10] = P[5 < X < 25] = P[ X < 25] − P[ X < 5]
=1 − e −25/15 − (1 − e −5/15 )
=e −5/15 − e −25/15 =0.52766.

Page 173 of 175

 622. Solution: E

a+b
= 16.36, = a 32.72 − b
2
(b − a ) 2 b−a
= 7.632 , = 7.63, b= − a 26.431095
12 12
Substitute the first equation into the second,
b − (32.72 − b) = 26.431095
b = 29.5755
Plug this value of b back into the first equation:
a= 32.72 − 29.5755 = 3.1445
b 29.5755
= = 9.4056.
a 3.1445

623. Solution: B

Let X be the normal random variable. For a normal distribution, the mode equals the mean, so
µ= 56.

P[ X < 52.20] =
0.40
 52.20 − 56 
P Z <  =
0.40
 σ
52.20 − 56
= −0.253347
σ
σ = 14.999185
 65.50 − 56 
Now, P[ X < 65.50] =P  Z <
 14.999185 
=P [ Z < 0.6334] =
0.7368.

624. Solution: E

Let X – automobile Insurance

Let Y – homeowners insurance

E( X + Y ) = 400 − 100 = 300

Var( X + Y )= 2002 + 5002= 290, 000
SD( X=
+Y) =
290, 000 538.5165
 0 − 300 
P[ X + Y >=
0] P  Z > = P[ Z > −0.5571]
= 0.7113.
 538.5165 

Page 174 of 175

625. Solution: E

The number of hurricanes in 3 years is Poisson distributed with mean 3. For 10 hurricanes to
occur in 10 years given that 8 have occurred in the first 7 years, 2 hurricanes must occur in the
last 3 years.
Let E be the event that 2 hurricanes occur in the last 3 years.
e −3 ⋅ 32
Then,= P[ E ] = 0.2240.
2!

626. Solution: A

Vi = λi for i = 1, 2
From the given info regarding the probability of no claims, we have:
e − λ1 λ10 e − λ2 λ2 0
= 0.5
0! 0!
− λ1 − λ2
2e = e
2 = e − ( λ2 −λ1 )
λ1 − λ2 = ln 2 = 0.6931.

627. Solution: C

=
0.14 =
/ 0.70 0.2000, y 0
0.21/
= =
0.70 0.3000, y 1
p ( y | X < 2) =

=
0.27 =
/ 0.70 0.3857, y 2
0.08
= =
/ 0.70 0.1143, y 3
E (Y | X= < 2) 0(0.2000) + 1(0.3000) + 2(0.3857) + 3(0.1143)
= 1.4143.

Page 175 of 175