ARM 401-3 Exam Questions And Answers
Probability Analysis -
correct answer ✅a technique for forecasting events based on the
assumption that the future events are based on an unchanging
probability distribution.
Probability Distributuion -
correct answer ✅presents, in tabular or graphic form, all possible
outcomes and their probabilities for a set of circumstances.
Theoretical probability (a priori probability) -
correct answer ✅is theoretical and constant and can be calculated
without actual trials (coin flips, dice, card draws)
Empirical probability (a posteriori probability) -
correct answer ✅is practical and changeable; is computed from
historical date from study samples (mortality rates, batter lives)
a priori probability is another name for -
correct answer ✅Theoretical probability
a posteriori probability is another name for -
correct answer ✅Empirical probability
, ARM 401-3 Exam Questions And Answers
Law of large numbers -
correct answer ✅applies to empirical probabilities; as the number
of actual losses increases, forecasts of future losses become more
reliable, if the units exposed to the loss have been and will remain
identical, numerous, and independent; states that loss
predictability increases with the square root of the number of
exposure units or losses.
Expected value -
correct answer ✅equals the weighted average of all possible
outcomes of a theoretical probability distribution.
Mean -
correct answer ✅equals the sum of all observed values divided by
the total number of observations.
Standard deviation -
correct answer ✅indicates the variability between each value or
outcome in a data set and the data set's mean.
coefficient of variation -
correct answer ✅is used to compare the variability of two
distributions with different means; equals a distribution's standard
deviation divided by its mean
Probability Analysis -
correct answer ✅a technique for forecasting events based on the
assumption that the future events are based on an unchanging
probability distribution.
Probability Distributuion -
correct answer ✅presents, in tabular or graphic form, all possible
outcomes and their probabilities for a set of circumstances.
Theoretical probability (a priori probability) -
correct answer ✅is theoretical and constant and can be calculated
without actual trials (coin flips, dice, card draws)
Empirical probability (a posteriori probability) -
correct answer ✅is practical and changeable; is computed from
historical date from study samples (mortality rates, batter lives)
a priori probability is another name for -
correct answer ✅Theoretical probability
a posteriori probability is another name for -
correct answer ✅Empirical probability
, ARM 401-3 Exam Questions And Answers
Law of large numbers -
correct answer ✅applies to empirical probabilities; as the number
of actual losses increases, forecasts of future losses become more
reliable, if the units exposed to the loss have been and will remain
identical, numerous, and independent; states that loss
predictability increases with the square root of the number of
exposure units or losses.
Expected value -
correct answer ✅equals the weighted average of all possible
outcomes of a theoretical probability distribution.
Mean -
correct answer ✅equals the sum of all observed values divided by
the total number of observations.
Standard deviation -
correct answer ✅indicates the variability between each value or
outcome in a data set and the data set's mean.
coefficient of variation -
correct answer ✅is used to compare the variability of two
distributions with different means; equals a distribution's standard
deviation divided by its mean
