Describe how changes in the parameters affect the distributions.

Free SOA Exam ASTAM (Advanced Short-Term Actuarial Mathematics) lesson in Severity Models. 8 min read, ~1,220 words.

Scale parameter: multiplying by gives the same family with. The k-th moment scales by. CV and skewness unchanged. Shape parameter (or ): controls tail thickness, skewness, hazard direction. Independent of scale. Lognormal is the odd one: is a log-scale parameter, is shape AND moves the mean. Inflation acts as a...