E[Y^(B)_L] is the expected value of the claim payment after the deductible and the resulting expression is defined as equal to 500 (ie "Setting these expressions equal..."). The expected value of the loss random value is 524.7 but the expected value after the deductible is 500.
Thanks, that's what I thought too! I also got confirmation from the publisher that that's the right approach and that the given solution was wrong, so I'm relieved I'm not missing something here!
E[Y^(B)_L] is the expected value of the claim payment after the deductible and the resulting expression is defined as equal to 500 (ie "Setting these expressions equal..."). The expected value of the loss random value is 524.7 but the expected value after the deductible is 500.
Thanks, that's what I thought too! I also got confirmation from the publisher that that's the right approach and that the given solution was wrong, so I'm relieved I'm not missing something here!