Instead of integrating your pdf from 0 to infinity, split into two integrals (0 to 4, and 4 to infinity). You figure out what to put for your integrand.
Let Y ⇠ Exp(2) be the size of an insurance loss. If the insurance company pays min(Y, 4), what is the variance of that payment?
I know that lambda =2
If I put that in the pdf I get: 2*e^(-2x). I don't understand how to use the information given by min(Y, 4)
Last edited by endlessend25; 11-14-2016 at 01:51 PM.
Instead of integrating your pdf from 0 to infinity, split into two integrals (0 to 4, and 4 to infinity). You figure out what to put for your integrand.
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