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An actuarial analyst, James, is tasked with fitting an appropriate distribution to the following claims...

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Accounting

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An actuarial analyst, James, is tasked with fitting an appropriate distribution to the following claims data and estimating its parameter(s). Claim Amount Number of Claims (0, 1,000] 3 (1,000, 2,000) 2 (2,000, 0) 1 James asks the database administrator, Heather, for the exact amounts of the six claims above, but she is unable to locate the data. She informs James that a more senior administrator might be able to locate the data when he returns from vacation in a week. In the meantime, James decides to use the method of maximum likelihood to fit an exponential distribution with mean to the data. A week later, James is provided with the exact claim amounts. Claim Number Claim Amount P073545 2,100 P215656 1,700 P220014 600 P494853 800 P570830 900 P580588 1,100 Since his first analysis, he has updated his assumptions. He decides to fit a gamma distribution with a = 1.2 and 0 to the new data, also using maximum likelihood. Calculate the absolute difference in the maximum likelihood estimate of O between the two analyses. A 33 B 189 C 200 D 233 389

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