IAI Actuarial Core Principles · Actuarial Statistics · Basic univariate distributions and generating samples
A claim settlement delay X (in days) for a Pune insurer is uniform on (4, 16). What is Var(X)?
The variance is 12. For a continuous uniform distribution the variance is (b-a) squared over 12, so with width 12 it equals 144 divided by 12, which is 12.
- A12Correct
- B1
- C6
- D3
- 144
Explanation
Var = (b-a)^2/12 = 12^2/12 = 12. The value 144 forgets to divide by 12; the value 1 would be wrong as it uses a width of about 3.46; 6 is the mean-type confusion with half width.
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