Actuarial Science - Part 1 problem, the probability that the policyholder is a good driver given that the actuary's previous observations can be expressed as . Calculate .
Based on
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We use the result from the solution Actuarial Science - Part 1 problem. Therefore, the probability that the policyholder is a good driver given that N 1 = 0 and N 2 = 1 is Pr [ G ∣ N = 0 ∩ N = 1 ] = Pr [ N = 0 ∩ N = 1 ] Pr [ N = 0 ∣ G ] ⋅ Pr [ N = 1 ∣ G ] ⋅ Pr [ G ] = 0 . 1 4 2 5 0 . 7 ⋅ 0 . 2 ⋅ 0 . 7 5 = 1 9 1 4 . Thus, p + q = 1 4 + 1 9 = 3 3 .
# Q . E . D . #