Classes of Distributions and Their Relationships
Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Severity, Frequency, and Aggregate Models. 9 min read, ~1,314 words.
Exponential Gamma Generalized Gamma. Exponential Weibull Generalized Gamma. Weibull = power transform of exponential: where. Lognormal = exponentiated normal. Pareto = continuous mixture of exponentials. Mixture variance = within + between. Never just the weighted average of component variances. Spliced weights are not probabilities: they are normalizing constants.
Read the full lesson, free →
Worked examples, audio narration, and practice. No signup to read.
What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 2c
Browse all free Exam FAM lessons or jump into free Exam FAM practice questions.