Question

Let X be a random variable denoting the amount of loss in a business. The moment generating function of X is
$M(t)=(\frac{2}{2-t})^2,\ \ \ \ t< 2.$
If an insurance policy pays 60% of the loss, then the variance of the amount paid by the insurance policy equals __________ (round off to 2 decimal places)

Answer 1

The correct answer is 0.17 to 0.19.(approx)