Insurance The difficulty with the mathematical model in Exercises 28 is that no "grace period" is provided: there should be a certain positive probability of moving from G1 or G2 back to G0. A new system with this feature might produce the following transition matrix.
Suppose that when this new policy is adopted, the company has 50,000 policyholders, all in G0 Find the number in each group after the following lime periods.
(a) 1 year (b) 2 years (c) 3 years
(d) Write the transition matrix for a 2-year period.
(e) Use your result from part (d) to find the probability that a driver in G0 is still in G0 two years later.
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Finite Mathematics (11th Edition)
- Elementary Linear Algebra (MindTap Course List)AlgebraISBN:9781305658004Author:Ron LarsonPublisher:Cengage Learning