STAT 486a Problem Set 2 Due Date: January 30, 2014

Name:
Answer the following problems completely and neatly. You are expected to work independently of one another. No solution, no credit. 1. Suppose you are given the following information: (i) The probability that a 70-year-old survives three years is 0.95. (ii) The probability that a 71-year-old survives 2 years is 0.96. (iii)
75 71

t dt = 0.107

Write the appropriate actuarial notation and determine the probability that a 70year-old survives 5 years. 2. The force of mortality is of the form t = 1 t , 0 < t 100. 50 2

(a) Write the approrpiate actuarial notation and determine the survival distribution function, cumulative distribution function, and probability density function of the future lifetime of a 40-year-old. (b) Write the appropriate notation and determine the probability that a 40-yearold dies between ages 62 and 70. (c) Write the appropriate notation and determine the expected value and median of the future lifetime of a 40-year-old. Based on your results, what can you say about the shape of the distribution of the future lifetime of a 40-year-old? Justify your answer. (d) Write the appropriate actuarial notation and determine the probability mass function of the number of completed years prior to death of a 40-year-old. (e) Write the appropriate actuarial notation and determine the curtate expectation of life of a 40-year-old. (f) Write the appropriate actuarial notation and determine the probability that the number of completed years prior to death of a 40-year-old is at most 17 years. 1

3. You are given that the probability density function of the age-at-death random variable is of the form ct2 , 0 < t 95. (a) Determine the value of c to make the given function a valid probability density function. (b) Write the appropriate actuarial notation and obtain expressions for (i) the distribution function, (ii) the survival function, and (iii) the force of mortality for the age-at-death random variable. (c) Write the appropriate actuarial notation and obtain expressions for (i) the distribution function, (ii) the survival function, and (iii) the probability density function for the future lifetime of a life-age-x. (d) Write the appropriate actuarial notation and determine the probability that a newborn survives to age 50. (e) Write the appropriate actuarial notation and determine the probability that a 30-year-old will die between ages 58 and 85. (f) Write the appropriate actuarial notation and determine the expected future lifetime of a 40-year-old. (g) Determine the median future lifetime for a 40-year-old.

4. Suppose the force of mortality is t =

1 , 1+t

t > 0.

(a) Write the appropriate actuarial notation and determine the probability that a newborn dies within 10 years. (b) Write the appropriate actuarial notation and determine the probability that a 25-year-old survives 15 years. 5. Graduate Students Only: Consider the curtate future lifetime of a life-age-x. Show that the cumulative distribution of this random variable is of the form FKx (k ) =k+1 qx , k = 0, 1, 2, . . .