Probability and Statistics

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  1. Probability is measured
    between 0 and 1
  2. Probability =
    • # of Ways A could happen
    • Total # of Outcomes
  3. Misconceptions about Probability
    • It is the likelihood of an event, not a certainty
    • Past outcomes do not influence future outcomes
    • There is no such thing as an event being "due"
  4. Discrete Probability Distributions have how many possible outcomes?
    a limited, distinct number
  5. Coefficient of Variation
    • Standard Deviation
    • Expected Value
  6. Cumulative Distributions (CDFs)
    Probability that the outcome is Less Than or Equal to some value for all possible values
  7. EP=
  8. 2 Types of Exceedance Probability Curves:
    • Occurrence - largest loss within a year
    • Aggregate - sum of all losses within a year
  9. 2 Ways to express Probabilities:
    • Return Periods, or
    • Exceedance Probabilities (EP)

    They are the same thing.  We prefer EPs.  A 1% probability correlates to a 100 year return period. (1 in 100 chance, or 1%)
  10. Tail Value at Risk (TVAR)
    %TVAR is the average loss of all years with having an EP<p.

    .1% TVAR is the expected losses given the EP<.1%.
  11. Numerical Convolution
    Combines the probability distributions of two events into a single probability distribution that represents the sum of the two events.

    Touchstone uses this to combine loss distributions.

Card Set Information

Probability and Statistics
2014-03-27 20:21:30
statistics Probability

Cat School Prob & Stats
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