Which of the Following Statements About Convolution Is Not correct

question 57

Multiple Choice

Which of the following statements about convolution is not correct?

• A) Regardless of the number of possible outcomes, risk managers still perform convolution calculations by hand.
• B) Convolution uses joint probabilities to estimate the combined effects of frequency and severity.
• C) The outcome of the calculation using convolution will be expressed in dollars.
• D) The total probability of all loss combinations have to add up to 1.

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Definitions:

Contract Curve

In economics, it represents the set of optimal points of exchange between two parties, where no further mutual benefit can be achieved through trade.

Edgeworth Box

A graphical representation of the trading possibilities and equilibrium between two individuals with fixed amounts of two goods.

Utility Function

A mathematical model in economics that represents consumer preferences over a set of goods and services, by assigning a utility value for each possible bundle of goods.

Convex Preferences

Preferences that express a consumer's desire for diversified bundles of goods over extreme bundles, depicted graphically as convex indifference curves.