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Misha Larkins [42]
2 years ago
15

The moment generating function for health care costs experienced by a policyholder is given as follows:

Mathematics
1 answer:
Kaylis [27]2 years ago
6 0

Answer:

0.525 = 52.5%

Step-by-step explanation:

Moment generating function ( Mx(t) ) = ( 4 / 4-t)^3

Reimbursement by Insurer = 70%

<u>Determine the expected reimbursement by insurer for policyholder</u>

 d/dx (Mx(t) ) = d/dt ( 4 / 4-t)^3 = d/dt (1 - t/4 )^-3

                                                 = 3/4 ( 1 - t/4 )^-4 =  3/4

as t → 0

Given that the insurer reimburses 70% = 0.7

expected reimbursement = 0.7 * 3/4  = 0.7 * 0.75 = 0.525

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