IAI Actuarial Core Principles · Actuarial Statistics · Hypothesis testing and goodness of fit
A Poisson distribution is fitted to claim counts by estimating its mean from the data. After grouping, there are 6 cells, each with expected frequency at least 5. At the 5% level, what are the degrees of freedom of the chi-square test?
The degrees of freedom are 4. With 6 cells we lose one for the total count constraint and one for the estimated Poisson mean, so 6 - 1 - 1 = 4.
- A3
- B4Correct
- C5
- D6
- 7
Explanation
Degrees of freedom = number of cells - 1 - number of estimated parameters = 6 - 1 - 1 = 4. Using 5 would ignore the estimated mean.
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