Question

Under an insurance policy, a maximum of five claims may be filed per year by a policyholder. Let Pn be the probability that a policyholder files n claims during a given year, where n 0,1,2,3,4,5. An actuary makes the following observations:
i) Pn≥ 2pn+1 for n= 0, 1,2, 3,4
ii) The difference between pn and pn+1 is the same for n 0,1,2, 3,4
iii) Exactly 40% of policyholders file fewer than two claims during a given year Calculate the probability that a random policyholder will file more than three claims during a given year.
A) 0.14
B) 0.16
c) 0.27
D) 0.29
E) 0.33

Answer 1

D) 0.29 is the answer i think